LAHORE - The hike in Federal Excise Duty (FED) on cement will further increase illegal cross border imports of Iranian cement.

Industry experts said on Sunday that increase in FED was against the industry’s demand, as the sector was seeking some reduction in taxes to further enhance domestic dispatches.

They said that the change in FED would give a boost to smuggling. FED on cement had been increased from 5 percent on retail price (ie Rs 425 per ton) to Rs 1000 per ton in the federal budget, 2016-17.

The All Pakistan Cement Manufacturers Association (APCMA) spokesman appealed to the government to review its decision as this will not only affect the consumers, but also the industry as due to high cement prices, the consumption would come down.

Regarding cement exports, he said that constantly falling exports were adding to the industry woes. Exports from the country massively declined by 18.38 percent to 5.87 million tonnes compared with exports during the last fiscal year that were 7.2 million tonnes.

Exports to India increased by 42.53 percent to 992,631 tonnes during the fiscal year 2015-16 as against 696,417 tonnes during the last fiscal year.

However, decline in exports to Afghanistan by 15.1 percent and via sea to other countries by 32.68 percent affected the overall figures.

Unstable situation in Afghanistan and the influx of Iranian cement limited exports to 2.44 million tonnes during the fiscal year, 2015-16, as against 2.87 million tonnes during the preceding fiscal year.

Likewise, increased global competition coupled with economic slowdown in countries to which Pakistan exports its goods had reduced the country’s exports by sea to 2.44 million tonnes during fiscal year, 2015-16 compared with 3.62 million tonnes during the preceding fiscal year.

Industry circles fear that additional excise duty might dampen the construction activities. They argued there was no need to increase the tax as cement was already the most heavily taxed commodity in Pakistan.