The AIDC meeting held on 15 September 2014 has approved the proposal for Registration of Automotive Vendors with EDB and suggested that EDB and PAAPAM should devise the mechanism for registration of vendors and present in next AIDC Meeting.
According to details the Deputy General Manager (Tariff) EDB apprised the house that all the 2/3/4 wheelers are required to operate under the criteria defined in SRO 656(I)/2006 and procure their inputs as per the sources defined in SRO 656(I)/2006 i.e. i) import through approval from EDB, ii) Manufacturing of parts through in-house facilities and iii) procurement from Sales Tax registered vendors having in-house facilities for the manufacturing of parts. While submitting initial list and reconciled records at the end of the year, it has been observed by EDB that certain vendors reported by the OEMs as their vendors are not genuine. This has opened the window for pass through of parts and also encouraged the supply of sub-standard parts to OEMs especially in case of 2/3 wheelers. This mechanism has also discouraged the localization of parts in the country besides having revenue loss to the national exchequer.
DGM Tariff EDB further emphasized that the few vendors reported by OEMS in the list are not approved by EDB under SRO 655(I)/2006 because they do not avail the concessionary regime. He also informed the house that all the vendors do not possess membership of PAAPAM and as such it becomes difficult for EDB to assess the status of manufacturing facilities of these vendors operating out of the concessionary regime of SRO 655(I)/2006.
In order to have a complete data of the local vendors supplying parts to the OEMs, irrespective of their registration/ membership with EDB/ PAAPAM, it was proposed by EDB that all the vendors supplying parts to any of the OEMs should be registered with EDB and should be made liable to provide status of their manufacturing facilities to OEMs verified by EDB.
The representative of PAAPAM, while supporting the proposal strongly also suggested that the non-registered vendors should also be registered with PAAPAM because PAAPAM already have a proper system for verification and registration of vendors. PAAPAM also volunteered their support to carry out the registration of vendors.
EDB’s proposal was agreed by the house in principle. However, representative of FBR pointed out that it is the duty of OEMs to procure the parts from the vendors who are genuine manufacturers. The situation must be better in case of large manufacturing companies which are members of PAMA. However, in case of motorcycle industry, the issue of non-registered vendors is of serious nature.
The chair inquired about the existing prerequisites and registration system. It was
highlighted by EDB that the company supplying parts to OEMs must be income tax and sales tax registered. The company applying for registration must have at least two confirmed purchase orders from OEMs and they must possess physical manufacturing facilities. However, in case of vendors not availing the concessionary regime, the registration is not being carried out.
In reply to a question by the chair, DGM (Tariff) EDB appraised the house that the technical Team for registration of vendors consists of members from FBR, DGMP, MVRDE, EDB and SEC, which is already notified for physical verification, shall carry the task of physical verification of vendors.
The house agreed that there must be a regulatory mechanism for the vendors. A few participants expressed their concerns as to whether the proposed registration of vendors will be for the revenue purpose only or for provision of support to the vendors also. Additionally, the registration will be one time only or on yearly basis. The house was informed that registration of vendors is being done on one time basis at present which is being reviewed every year. The chair advised that a proper mechanism for registration of vendors including those who are not availing the benefits of concessionary SRO needs to be devised and the efforts should be geared towards what the committee wants to achieve.
-Published on page#12, October-2014 edition of MOBILE WORLD Magazine