KARACHI: The local tyre industry is facing a two-fold problem - shortage of raw material and the influx of smuggled tyres, creating serious difficulties to survive during ongoing economic condition.
According to Hussain Kuli Khan, CEO of Ghandhara Tyre, the industry is dealing with a shortage of raw material and the influx of smuggled tyres.
Khan said that the shortage of raw material is due to the government’s decision not to allow opening of LCs, adding that majority of the raw materials used in the industry are imported from approved sources, and the industry has a high local value addition, which saves precious forex for the country.
The import of tyres has been decreased by 47% in the first half of the current financial year due to the devaluation of the Pakistani rupee against the US dollar. As a result, the market is flooded with smuggled tyres of inferior quality, mainly passenger car radial tyres.
Smuggling of tyres alone is costing the national exchequer more than Rs 40 billion annually, and it is affecting the local tyre industry. The Customs department has seized over 55,000 smuggled tyres, mainly car tyres, worth Rs 540 million in Karachi alone, he maintained.
The majority of the seized tyres are of Chinese origin with changed specifications, serial numbers, sizes, and manufacturing dates.
Customs officials informed that smugglers are using different tools to make the smuggled tyres exactly as per the import GDs of other imported consignments.
It is an open secret that our neighbouring country Afghanistan’s consumption is one third of our country. Therefore, the government should re-evaluate the data of the items being imported via the Afghan Transit Trade (ATT) and see if the numbers of tyres being imported are supported by the vehicle population in Afghanistan, CEO Ghandhara Tyre said.
Hussain emphasized the importance of providing a level playing field to tax-compliant local industries and protecting the national treasury from the damage caused by smuggling. To achieve this, it is necessary to check the stock in the markets and take action against sellers by confiscating the illegally imported tyres, he said.
The local tyre industry is playing its role in providing revenue to the exchequer and employment opportunities.
Ghandhara Tyre alone contributes over Rs 4.29 billion annually to the national exchequer. The government must take action to protect the local tyre industry and curb the menace of smuggling, he added.
Copyright Business Recorder, 2023
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