Smuggling, mis-declaration, under invoicing hurting tyres industry

LAHORE  –   Smuggling, mis-declaration and under invoicing is not only hurting the local tyres industry but also causing revenue loss of billions of rupees to the government, said Chief Executive Officer of the General Tyre and Rubber Company (GTR) Hussain Kuli Khan. “Smuggling is like a termite that eats and hollows a country from within. According to 2017-18 statistics, the tyres industry incurred a GDP loss of approximately Rs30 billion ($210 million) at current rate of duty because of smuggling only”, he said while briefing a group of journalists during their visit to the GTR’s plant.

Hussain Kuli Khan said that had tyres been imported through proper channel, this would have resulted in additional revenue to the government and increased employment by fulfilling the country’s demand through supporting local tyre industry.

Moreover, he added, “Tyres from China have zero percent duty on them. Thus, there should be no smuggling of truck bus radial tyres from China. But that is not the case as majority of the smuggled TBR tyres are from China,” he said. This is the reason, he added, today many local industries have either shut down or moved out which resulted in loss of jobs and foreign exchange because of this illicit trade. “Reduction or abolishing duties is not the cure. This will in turn damage the ability of local industry to grow, develop and compete internationally,” said Hussain.

Besides smuggling GTR is also suffering from mis-declaration of sizes i.e., from one HS code to another to avoid duty/tax, and heavily under invoiced tyres, he said.

The CEO suggested some steps the government should take to curb this menace. He suggested Federal Board of Revenue (FBR) to ensure that no tyres without documents are sold in the market. FBR should raid the markets and seize the tyres that the dealers cannot show papers for. “This should not be hard as the smugglers are selling these tyres openly in the commercial centers,” said Hussain. He added that effective border controls were needed in fact, and ‘our borders needed to be secured in the interest of national security’. Secondly, he added, the government should ensure that smuggled tyres do not come in through the border check posts at Chamman, Taftan and Landi Kotal.

Also, he emphasized, the government should re-evaluate the data of the items being imported via the Afghan Transit Trade (ATT) and see if the vehicle population in Afghanistan supports the numbers of tyres being imported. “Items under the guise of ATT are either unloaded in Karachi or come back from the Afghan border via smuggling,” he claimed.

Moreover, he added, Master Bill of Lading should be made mandatory for imports instead of Third Party Bill of Lading to get rid of under-invoicing. He hoped that these positive steps would help the government earn more in the form of duty and taxes, which was the need of the time. In the end, he said that the company since its inception in 1964 was continually investing in the plant and equipment to enhance its product quality, and quantity. “In the last four years, more than Rs2 billion has been invested in the company,” he said, adding, it has enhanced its annual production capacity to meet the growing demand of the country as it caters to four market segments: original equipment manufacturers after market, government departments/institutions, and export market.

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