Abdul Aziz Anwar

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

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SUMMARY AND CONCLUSIONS

The object of this project was to study the impact of protection on the growth of bicycle industry as well as industries manufacturing tyres and tubes, spare parts and accessories. It was also intended to review the quality of production and price trends over a number of years. The scope of the survey covered pedal bicycles of all sizes and specifications. Factories registered under Section 2(j) of the Factories Act 1934 as well as smaller unregistered concerns were covered by the survey.

At the time of this survey, there were five factories manufacturing bicycles and another five producing bicycle tyres and tubes in West Pakistan, all registered under the Factories Act. All these units were covered by the survey. In the case of concerns manufacturing spare parts and accessories, a sample consisting of 14 registered and 10 unregistered units was selected. These factories were situated at Lahore, Karachi, Sialkot, Lyallpur, Gujrat and Rawalpindi in West Pakistan.

Bicycle Manufacturing Industry

When Pakistan came into being, there was not a single plant in the country for the manufacture of bicycles, tyres and tubes and only a very limited capacity to produce some parts and accessories existed. The increasing demand had, therefore, to be met by imports. The annual average number of bicycles imported during the O.G.L. period, i.e., 1948-52, was 1,27,080. With the suspension of O.G.L., however, the average number imported during the period 1953-58 came down to only 18,462 per annum showing a decrease of 85.5 per cent.

The restrictions imposed on the import of bicycles as well as spare parts gave an impetus to the establishment of the industry in West Pakistan. Two bicycle manufacturing plants were installed in 1953 under the name The Pakistan Cycle Industrial Co-operative Society, and the Capital Industries. In 1954, Sartaj Industries also started assembling bicycles.

The conditions prevailing at that time were far from satisfactory for the development of the industry. It had to withstand the impact of severe competition from imported bicycles which were generally, preferred by the public. The industry was, therefore, in need of protection before it could stand upon its feet and it approached Government for this purpose. On the recommendation of the Pakistan Tariff Commission, the Central Government granted protection to the bicycle industry in 1962. Before this, the Government had already granted protection to bicycle pump industry and bicycle tyres and tubes industry. As a result, two more factories, namely, Saifee Development Corporation (1963) and BECO (1964) started manufacturing bicycles.

Capital Investment. The total capital investment in this industry increased from Rs. 51.1 lakhs in 1959-60 to Rs. 142.8 lakhs in 1963-64 - an increase of 179.5 per cent. The average investment per factory more than doubled while the index number rose from 100 in 1959-60 to 210 in 1963-64. Besides, about Rs. 100 lakhs were invested in the bicycle division of BECO. The total investment increased at a higher rate after the protection was granted to the industry.

Installed Capacity. An enquiry into the industry was conducted by the Tariff Commission in 1958-59. The installed capacities of the three old units rose from 1,20,000 in 1958-59 to 2,12,000 in 1964-65. During this period new capacity of manufacturing 1,20,000 cycles was installed by Saifee and BECO.

Production. The production of bicycles has been increasing year after year. Starting from 2,928 in 1953-54, it increased to 19,496 in 1958-59 and to 1,24,056 in 1963-64. The year 1959-60 recorded a big jump to 51,304. This was due to the liberal grant of import licences for raw materials. Production has been increasing at a higher rate since the grant of protection. The use of imported parts has been progressively decreasing as against the home-made parts in the assembly of a complete bicycle.

The demand for bicycles has been increasing in rural areas at a higher rate than in the urban areas where more automatic vehicles like scooters, auto-cycles, etc., are preferred. With the increase in road mileage and improvement in the standard of living in the backward areas during the Third Five-Year Plan (1965-70) the demand for bicycles is likely to increase further.

Recently, the Pakistan Cycle Industrial Co-operative Society has obtained foreign currency loan of Rs. 12,20,000 in Japanese Yens from P.I.C.I.C., for modernising its plant. The Capital Indutries