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Smuggling of tyres aesults in a Rs40 billion revenue loss

LAHORE: Industry players argue that Pakistan’s expanding budget deficit may be handled by reducing the amount of commodities smuggled out of the country, which is hurting the economy.

They claim that illicit trading and smuggling of critical items like as pharmaceuticals, lubricants, vehicle spare parts, and tyres are costing the government a lot of money.

Tyre smuggling alone costs the government more than Rs40 billion every year, in addition to damaging the native economy.

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Annual demand for tyres in the country is approximately 14 million pieces. Around 15% of the demand is met through domestic production while 35% comes through imports via legal channels. The remaining 50% of the demand is met through the smuggled tyres.

Recently, tyre imports have declined mainly due to the State Bank of Pakistan’s requirement of 100% cash margin for imports coupled with the global market volatility.

Tyre imports via legal channels have dropped 17% in the past five months.

According to the stakeholders, the smuggling declined significantly last year because of the restrictions imposed due to the Covid-19 pandemic.

“However, it has been on the rise since August 2021,” they said, adding that despite the Federal Board of Revenue’s (FBR) strict measures at the customs level, still “a lot more efforts are required”.

Tyres were being smuggled via Torkham, Chaman and Taftan borders, and from there these illegal tyres were sent to the local consumption centres.

With over 90% of the border being fenced, smuggled tyres were making their way through the border check posts only, they alleged. The most unfortunate part is that a majority of tyres are of Indian origin.

“To protect the local industry and national exchequer, it is necessary to check stocks in markets and take action against sellers (dealing in smuggled items) by confiscating their illegally imported goods,” suggested General Tyres Chief Executive Officer Hussain Kuli Khan.

Talking to journalists, Khan said that the government should re-evaluate the data of goods being imported via Afghan Transit Trade (ATT) and “see if the number of tyres being imported is supported by the number of vehicles in Afghanistan”.

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He was of the view that the goods imported under ATT were either offloaded in Karachi or were coming back from the Afghan border via smuggling.

“This needs to be addressed,” he said, adding that the customs department should ensure that the transit facility was not misused.

Khan emphasised that the domestic industry was playing its role in providing revenue to the national exchequer along with providing employment opportunities.

He urged the government to take effective measures to curb smuggling of tyres and improve competitiveness of the industry.

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