Pakistan: Indus Motors shuts down production Plant


Indus Motors Company (IMC), the maker of Toyota vehicles, has chosen to close its local production facility from December 20 to 30, claiming a delay in State Bank of Pakistan import approvals (SBP).

In a letter addressed to the general manager of the Pakistan Stock Exchange, the IMC management said that the central bank had introduced a new mechanism for obtaining prior approval for the import of “CKD kits and components of passenger cars (HS Code 8703 Category)” for the auto sector.

The letter stated that “the aforesaid delay in the approvals for the company and vendors has created hurdles in the import and clearance of consignments for raw materials and components of the company,” adding that this has resulted in insufficient inventory levels and consequently has created an adverse impact on the supply chain and production activities.

An earlier media report claimed that limits put in place by the SBP, via which the bank instituted a procedure requiring prior approval from the SBP for the import of a select few commodities, including CKDs, forced auto assemblers to take non-production days starting after May 20.

Assemblers said that the decision had been causing a delay in payments to foreign suppliers thus creating huge business risk for local industry.

“These restrictions have so far prevented around $25 million in foreign payments from being made, which has caused investors to lose faith in the Pakistani market, and any additional delays in the SBP’s approvals will prevent $80 million from being contributed to the exchequer,” they continued.

They claimed that the industry was now engaged in development activities for a number of new models. The manufacturers, vendors, and assemblers must import equipment, moulds, tools, and fixtures for the creation of new technology vehicles and parts. The testing activities must be carried several months before the start of mass production to ensure the smooth growth of local parts.

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