Abdul Aziz Anwar

Effects of Protection on the Development of Bicycle Industry in West Pakistan

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PREFACE

This project was undertaken at the suggestion of the Director of Industries, Government of West Pakistan, to study the impact of protection on the growth of bicycle industry and the allied industries manufacturing tyres and tubes, spare parts and accessories.

The sample, on which the study is based, covers all the five factories manufacturing bicycles, (4 in Lahore and 1 in Karachi), five factories producing tyres and tubes (2 in Karachi and one each at Lahore, Gujrat and Sialkot) and 14 out of 24 factories manufacturing spare parts and accessories (8 in Lahore, 3 in Karachi, and 1 each at Sialkot, Lyallpur and Rawalpindi). All these factories are registered under the Factories Act, 1934. In addition, 10 out of 19 unregistered small scale concerns were also included. The sample is, therefore, fairly representative.

The data was collected with the help of two Questionnaires which were sent by post. But the response being poor personal contacts and help from the Directorate of Industries improved the response and elicited better co-operation of the respondents.

At the time of Independence, there was not a single factory in Pakistan producing bicycles, tyres and tubes and only a very limited capacity for manufacturing some spare parts and accessories existed. The annual average of bicycle imports during the period 1948-52 came to 1,27,080. But with the suspension of O.G.L. it came down by 85.5 per cent to only 18,462. This gave the first impetus to the establishment of the industry in West Pakistan. But severe competition from abroad forced the industry to seek protection which, after an enquiry by the Tariff Commission, was granted in 1962. Previously to this, protection had already been granted to cycle pump and bicycle tyre and tube industries.

Protection stimulated the establishment of further unit, and benefited the industry in many ways. Total capital investment inereased from Rs. 51.1 lakhs in 1959-60 to Rs. 142.8 lakhs in 1963-64, i.e., by 179.5 per cent; and investment per factory during the latter period increased by 110 per cent. Produclion of bicycles increased from 2,928 in 1953-54 to 19,496 in 1958-59 and 1,24,056 in 1963-64.

Bicycle tubes were first manufactured in 1949 in Pakistan at Karachi and the industry spread to other places later. The bicycle tyre and tube indusiry received protection in 1953. Capital investment in this industry increased from Rs. 86.0 lakhs in 1959-60 to Rs. 184.0 lakhs in 1963-64 or by 140 per cent. Investment per factory increased by over 28 per cent during this period. Production of tyres and tubes in Pakistan increased by 343 per cent between 1953 and 1964.

Statistics relating to the factories (registered and unregistered) producing spare parts cover only the sample under study. Here also progress is quite obvious. As regards registered factories (sample 14 out of 24), in 1963-64, their total capital investment was Rs 43.18 lakhs which ment Rs. 3.08 lakhs per factory as against Rs. 1.79 lakhs in 1959-60, i.e., an increase of 72.1 per cent. The total value of output of these factories increased from Rs. 15.41 lakhs in 1959-60 to Rs. 28.82 lakhs in 1963-64, and average value of production per factory from Rs. 1.28 lakhs to Rs. 2.06 lakhs during the same period or by 60.9 per cent.

The untegistered factories are small scale concerns and as already noted, 10 out of 19 were included in the sample. The average investment per factory increased from Rl. 13,795 in 1959-60 to Rl. 15,794 in 1961-62 and Rl. 19,028 in 1963-64. The impact of protection is obvious for the last period. The value of output increased by 49 per cent between 1959-60 and 1961-62. the index of production (1959-60=100), rose to 197,7 in 1962-63 and 252,7 in 1963-64. It was revealed that between 1959-60 to 1963-64, while capital invested per concern increased by 37,9 per cent, the value of output per concern increased by 152,7 per cent. This was due mainly to greater rate of utilization of productive capacity with the increase in demand. The gratest difficulties had been the non-availability of raw materials and the shortage of capital.

The study further reveals that although domestically produced bicycles are still inferior to the imported product, their quality has been improving.

The burden on the consumers due to higher prices, an inevitable result of protection, is obvious, but let us hope that this sacrifice on the part of the consumer will put the industry in ist feet and will, in due course, enable it to face foreign competition without artificial props.

On the whole, the study indicates that the industry has derived considerable benefit from the policy of protection and Pakistan is approaching self-sufficiency with respect to this poor man's conveyance.

This report has been prepared by Mr. Aziz Anwar who deserve appreciation for the hard work that he has put into it. Mr. H.A. Syed, the Deputy Director of the Board, supervised the work and scrutinised the first draft of the report.

The board is grateful for the help received from the Directorate of Industries and co-operation given by the manufacturers concerned.

S. M. AKHTAR.