By Syed Wahaj Ahmed
Local tyre industry has appealed to the government to address smuggling and low Import Trade Price (ITP) values, which are two significant issues badly hurting the local tyre industry.
“To safeguard the local tyre industry, the government should focus on measures to curb smuggling. Strict measures include stringent enforcement by Federal Board of Revenue (FBR) to stop sale of undocumented tyres and tighten control at border check posts at Chaman, Torkham and Taftan,” said Chief Executive Officer (CEO) of GTR, Hussain Kuli Khan.
He said reduction in duties will not diminish smuggling which can be gauged by one example that a truck radial tyre 11.00 R20 (70% of share in truck bus radial tyres) has zero custom duty (on Chinese origin radial truck tyres) but it is still smuggled in from China in large numbers.
“The importers claim that if duties are reduced then smuggling will go down, as imports will rise. Last year, the imported tyre numbers nearly halved but there was no shortage of tyre in the market. This shows that the local tyre industry is capable of meeting the market demand,” he said, adding that in the motorcycle and agriculture tyres there is no smuggling and all demand is catered through local production as GTR is supplying passenger radial tyres and light truck radial tyres including Sport Utility Vehicles (SUVs) variants in the market.
He further said soon another player will also start production of light radial commercial and passenger radial tyres. A truck bus radial plant is also in operation in Pakistan. The government needs to safeguard the country tyre industry and give it a level playing field.
He also said, “the FBR can bridge tax deficits by maintaining duties on imported tyres and adjusting ITPs based on actual import prices, rather than lowering duty structures”.
The local tyre industry acts as an import substitute, resulting in savings amounting to millions of dollars. It takes over 100 million US dollars investment to set up a radial tyre plant. It provides employment and revenue to the exchequer.
“In last six years, GTR has made substantial investments of more than 4 billion in plant and equipment to meet the local requirements. As the sole local tyre company producing all categories, GTR is committed to provide “Made in Pakistan” international quality tyres,” added Khan.
He mentioned that GTR alone has contributed over Rs19 billion in taxes in the last 6 years.
It is pertinent to mention that the annual consumption of tyres in Pakistan stands at 14.5 million with local production accounting for 25%, imports for 15% and remainder smuggling.
