KARACHI: The smuggling of an estimated 2.5 million new and used tyres into Pakistan has been causing a revenue to the tune of round Rs15 billion annually to the national exchequer, dealing a huge blow to local tyre industry, the government and consumers alike.
Ironically despite the fact, except for the cement industry which is allowed to use tyres as an alternative fuel, used tyres are banned in Pakistan. Yet, they are being smuggled into and sold to the public. Even used winter tyres, which are not suitable for hot climate, have also been smuggled into the country.
Moreover brand new tyres produced years ago, hence expired from safety and quality point of view, are routinely being smuggled in and re-stamped with fresh dates locally, cleaned and then wrapped before being sold to unsuspecting consumers.
The imports through Afghanistan Transit Trade are far more than the actual requirements and the excess stuff is earmarked for smuggling into Pakistan through the two land routes – Chaman and Landi Kotal. According to estimates the loss of duty/taxes on other vehicle items will amount to a loss of another staggering sum of Rs20 billion while overall losses due to smuggling of items like tyres, cigarettes, tea, cosmetics, toiletries, and consumer goods probably works out to be Rs50 billion a year.
On the other hand, as a sequel to a long industry, importers and the Federal Board of Revenue debate, the import trade price (ITP) on import of tyres was raised by 3pc to 20pc, but with little hope for increase in revenue or protection to local tyre industry.
Experts are of the view that Customs valuation department should increase the ITPs by another 30pc in case of Chinese imports and by 20pc in other origins, including India. As per details, no increase has been made in ITPs for tyres coming from Japan.
Majority of tyre imports (around 50pc) are coming from China and the average increase in ITP for them has been just 14pc versus the industry’s demand of 50pc.
The second biggest imports are from countries like South Korea, Thailand, Indonesia, etc, which accounted for 25pc of total imports during 2012-13, and the average increase made by the customs in ITP was only 8pc versus the industry’s demand of at least 30pc.
Moreover, India accounts for 60pc of all truck tyre imports (double the quantity imported from China) and yet the increase in ITPs on truck/bus tyres imported from India was only 3pc.
