Although after a long debate between industry, importers and FBR, government has increased Import Trade Prices (ITPs) on import of tyres from three to 20 percent, experts believe the revision will neither enhance revenues nor give protection to local tyre industry.
Meager increase in ridiculously low ITP on import of tyres by the customs shows that the department still wants to protect the strong lobby of importers while inflicting a huge blow to government’s effort to enhance revenues, said a source related to Tyre Manufacturing Industry.
He said the Custom’s Valuation Department has always been averse to increasing the ITP which is a sign of their inclination to protect the strong lobby of importers at the expense of revenues to the government and the local tyre industry. The source further said that though a little difference is made by revising the ITPs which will not increase the government revenue significantly but it’s the right step in right direction at-least. Similar efforts are needed to be taken to curb under invoicing and mis-declaration.
The local tyre industry produces 36 sizes of tyres in different categories like passenger cars, light trucks, heavy trucks, agricultural tyres etc, and 75 percent of total imports during 2012-13 were of these very sizes giving severe tough time to local production.
‘Recently, the department increased ITPs only under strong pressure from the Ministry of Finance but the government will hardly get any additional revenue from this meager increase. The government should instruct the department to increase the ITPs by another 30 percent in case of Chinese imports and by 20 percent in other origins, including India.
As per details, no increase has been made in ITPs for tyres coming from Japan. Similarly, there is no increase in any agricultural tyre size from any source whatsoever. Also, majority of tyre imports (around 50 percent) come from China and the average increase in ITP for them has been just 14 percent versus the industry’s demand of 50%. The second biggest imports are from countries like South Korea, Thailand, Indonesia etc, which accounted for 25 percent of total imports during 2012-13, and the average increase made by the customs in ITP was only 8 percent versus the industry’s demand of at least 30 percent.
Moreover, India accounts for 60 percent of all truck tyre imports (double the quantity imported from China) and yet the increase in ITPs on truck/bus tyres imported from India was only 3 percent. ‘This meager increase is quite unfortunate as neither it will help Government of Pakistan to increase its revenue which is badly needed nor the local tyre industry to increase its production and save millions of dollars for the country.,’ added the source.