950823

Duty cut expected

to yield another

Rs 2.2 billion

RECORDER REPORT

KARACHI: Reduction of custom tariff from 40 percent to 25 percent on the import of truck and bus tyres has encouraged legal trade and the move is expected to generate additional revenue of around Rs. 2.2 billion for the national exchequer.

The consumers are likely to have various varieties and different brands of tyres within one or two months as the reduction in duty has paved the way for legal imports. Earlier the market was flooded with the Indian and Japanese tyres which found their way into Pakistan mainly under the garb of Afghan Transit Trade.

Due to the reduction of duties the prices of tyres have drastically slipped to Rs. 18,500 from Rs.24,500 per piece and it is expected that by the beginning of the new month these prices may further fall by Rs.3,000 to Rs.4,000 per piece. It is learnt that nearly 25 fresh letters of credit have been opened for different brands of tyres from China, Indonesia, Japan and Korea.

Habib Charnia, member, All Pakistan Tyre Importers and Dealers Association (APTIDA) has lauded the government's step to reduce the duty structure saying it would curb smuggling in a big way.

He said total requirement of all categories of tyres amounted to 2.2 million per annum in which local industry enjoys the share of 750,000 tyres. The balance of the requirement was met mainly through smuggling from Afghanistan. The inflow through legal imports may now rise. However, some traders are facing hardships because some of the customs officials are still charging the heavy slab of 65 percent on tubes of the same tyres. These officials are segregating tubes from tyres and imposing double tariff structure on the imports.

On the other hand the import duty on light truck and passenger vehicles is still on the higher side, i.e. 65 percent plus 15 percent sales tax. The association has learnt that smugglers have now switched to this item and booked huge consignments. To prevent local markets from this menace the government should immediately fix its import duty at 15 percent and abolish 15 percent sales tax also. This would encourage genuine importers and government revenue would increase manifold, said Habib.

According to sources close to the local tyre market, now the tubes of various brands have found a new outlet. As tubes are not in the negative list of the Afghan Transit Trade, some traders misuse this facility and it is necessary to abolish it because the tubes do not cross the border and are consumed in the country.

The traders have called upon the government to reduce the duty on tubes, too, as importers would have to go through an awkward exercise to import tubes separately.