The Indian automotive sector is looking at big opportunities in Pakistan should the direct shipment linkages between the two nations be established.
Industry bodies in India said that if direct shipment linkages between the neighbours are opened up, the automobile industry in Pakistan will move into a cycle from the current high-cost, low-demand vicious cycle.
The automobile industry in Pakistan is today heavily dependent on high cost inputs from Japan. Leading automobile players like Suzuki, Honda, Toyota and Nissan have already established presence in Pakistan, but suffers from low level of localisation.
A recent survey done by Associated Chambers of Commerce and Industry of India has come up with an estimated business of Rs 100 crore (Rs 1 billion) by 2010 for the on the auto component sector.
This will be an eight-fold increase from the current level of Rs 12 crore (Rs 120 billion).
'Over eight per cent hike in Indian auto component exports has been projected for the year 2010 based on the feedback that the Assocham received from its 50 component manufacturers who are confident that the auto component sector will receive a big boost after the Joint Business Council becomes functional, in view of the rising demand of Indian components in Pakistan', said Assocham's President, Mahendra K Sanghi.
All the Assocham's constituents that sent in their responses on a random survey conducted on ''Prospects of Indian Auto Component Exports to Pakistan' Post-JBC Take-off' were of unanimous view that direct shipment linkages will be established between Gujarat and Karachi which will have twin benefit for Indian auto component manufacturers as their direct exports will become cheaper by one third and will also open up gate to facilitate their component exports to Afghanistan via Pakistan.
The Automotive Components Manufacturers Association however pointed out that apart from the benefit that will accrue to the local component industry in India, the direct trade linkages will help in reducing the cost of automobile in Pakistan.
An ACMA (Automotive Component Manufacturers Association) offical said, 'Today the automobile industry in Pakistan is heavily depended on high cost imports from Japan.
Opening links with India will go a long way in cutting cost and also getting technology into that country.'
