Regulatory duties brought tyre imports down, but smuggling still continues unabated, rendering revenue losses to national exchequer and hurting the nascent local industry, traders and analysts in Pakistan said on Tuesday.
A senior industry official said smuggling has already caused shutdown of several local industries and their shutdown.
“The same situation is being faced by the local tyre industry,” the official said, requesting anonymity.
“Smuggling is a termite that eats a country from within. It should not be allowed or tolerated for a second.”
Last year the government slapped regulatory duties on tyre imports to preserve foreign exchange. Imports of tyres and tubes fell around 11 percent to $313.91 million during the last fiscal year of 2017/18.
Industry officials said smuggling still meets more than half of tyre demand in the country.
Equity analyst Arsalan Hanif at Arif Habib said smuggling has been eating away revenues of the local tyre manufacturing companies.
“Tyres are also smuggled under Afghan Transit Trade and if government takes firefighting measures the exchequer could earn billions of rupees per annum,” Arsalan added.
Industry officials agree that smuggled tyres don’t come through the border check posts at Chamman and Landi-Kotal.
“The government should re-evaluate the data of the items being imported via Afghan transit trade and see if the numbers of tyres being imported are supported by the vehicle population in Afghanistan,” an official said.
“Items under the guise of ATT are either unloaded in Karachi or come back from the Afghan border via smuggling. This needs to be addressed and customs department needs to ensure that this facility is not misused.”
Industry officials, however, doesn’t see removal of regulatory duties a solution.
“More than 80 percent of truck bus radial (TBR) tyres are imported from China and that are too with zero duty,” an official said. “There should be no smuggling of at least TBR tyres from China.”
The official further said the government needs to enact local manufacturing-friendly policies “so the industrial base of our country grows, and we lose our dependence on imported finished goods”.
