KARACHI – Smuggling and low Import Trade Price (ITP) values are two significant issues hurting the local tyre industry.
Pakistan’s annual consumption of tyres is estimated to be 14.5 million. However, only 25% of this demand is met by local production, while 15% is imported. The remaining 60% is supplied through smuggling. To protect the local tyre industry, CEO GTR Hussain Kuli Khan suggested that the government take strict measures to curb smuggling.
He proposed that the Federal Board of Revenue (FBR) should prevent the sale of undocumented tyres and tighten border control at Chaman, Torkham, and Taftan check posts.
Khan said that a reduction in duties will not reduce smuggling. For instance, a truck radial tyre of 11.00 R20 (which accounts for 70% of truck bus radial tyres) has zero custom duty (on Chinese-origin radial truck tyres), yet it is still being smuggled in large numbers from China.
He also clarifies that reducing duties won’t necessarily increase imports, as last year, the number of imported tyres nearly halved, yet there was no shortage in the market. This proves that the local tyre industry can cater to the market demand without a problem.
While motorcycle and agriculture tyres are not smuggled, he pointed out that GTR supplies passenger radial tyres and light truck radial tyres, including SUV variants. Soon, another player will start producing light radial commercial and passenger radial tyres, and a truck bus radial plant will operate. Therefore, the government must ensure a level playing field for the local tyre industry and protect it.
The CEO said the FBR should maintain duties on imported tyres and adjust Import Trade Prices (ITPS) based on actual import prices instead of lowering duty structures.
He emphasized that the local tyre industry is an import substitute, saving millions of dollars. Setting up a radial tyre plant requires an investment of over 100 million US dollars.
Therefore, it provides employment and revenue to the exchequer. In the last six years, GTR has made substantial investments of more than Rs 4 billion in plant and equipment to meet local requirements. Additionally, he added that the company contributed over Rs 19 billion in taxes in the same period.
