Indus Motors set to be first automotive firm to export semi-processed parts to Egypt

Indus Motor Company (IMC) has achieved a historic feat by becoming the first Pakistani auto manufacturer to join the global supply chain. The company has inked a deal with Toyota Egypt to export semi-processed parts, opening new avenues for the country's automotive sector.

The first shipment of semi-processed raw materials, slated for July 2023, marks a significant milestone for original equipment manufacturers (OEMs) in Pakistan. IMC aims to expand its exports in the future.

The occasion itself 

Ali Asghar Jamali, IMC's Chief Executive, attended a ceremony at IMC's plant in Port Qasim to commemorate the occasion. He expressed his excitement and emphasised the significance of this achievement for both IMC and the nation. He stated, "To witness the 'Make in Pakistan' dream extend beyond our borders is a momentous occasion — not only for IMC but for the entire country”. 

Being a part of Toyota's global supply chain affirms our dedication to put Pakistan on the world map and strengthen the overall economy. We look forward to further enhancing our capabilities through this collaboration and strive to position Pakistan's auto industry as a symbol of reliability and quality worldwide."

Why now? 

IMC highlighted how the partnership supports the Government of Pakistan's "Look Africa" policy, which seeks to enhance connectivity and trade links between the two regions. However, more importantly, the deal with Toyota Egypt aligns with the Auto Industry Development and Export Policy (AIDEP) 2021-2026. AIDEP outlines the objectives for bolstering the export capabilities of the Pakistani auto industry. 

AIDEP mandates that OEM contracts that restrict exports from Pakistan must be revised to permit exports to desired destinations and establish Pakistan as an export base for auto parts and vehicles. Under AIDEP, manufacturers will be required to export. The exports by the OEM have to be a ratio of their total import bill. The specifics targets are as follows: 

Financial Year	Mandatory Export as % of C&F Value
2021 -22	0%
2022 -23	2%
2023 -24	4%
2024 -25	7%
2025 -26	10%
Source: AIDEP  2021-2026

 

Obtaining the lowest hanging fruit 

AIDEP specifically addresses the export of automotive components, as Pakistan is already a thriving exporter in this arena. According to data released by the Pakistan Bureau of Statistics, Pakistan's exports of auto parts and accessories reached a staggering Rs 4.9 arab from June 2022 to May 2023.

The auto parts and accessories export industry has proven to be one of the most resilient sectors in Pakistan. The Rs 4.9 arab earned by the industry was a notable increase from the Rs 4.45 arab earned through June 2021 to May 2022, despite the entire June 2022 to May 2023 period being subject to capital controls in Pakistan.

As one of the largest automotive manufacturers in Pakistan, IMC boasts an extensive in-house network of parts manufacturers, bound by exclusive contracts. This affords IMC the luxury of deploying a vast network of suppliers for the task of exports, further bolstering their position in the market.