KARACHI, May 13: Pakistan Tea Association (PTA) has urged the government to reduce the import duty on tea to 10 per cent from 25 per cent in order to discourage smuggling.

“The informal sector is once again showing its muscles with its market share rising dramatically to 1997-98 figures of 40,000 metric tons,” PTA Chairman Saeed Ahmed Khawaja told a news conference at a local hotel on Tuesday.

It is not too late to launch a campaign against smuggling which is destroying the fabrics of the legal tea trade and industry, he said.

Most of the genuine trade has been marginalized in all parts of the country. Dry Ports all over the country have contributed to this menace, he added.

The issue of smuggling is not new: it had cropped up six years ago when import duty and taxes stood at a record 110 per cent; and 40,000 tons out of total 130,000 tons were imported via Afghanistan route into Pakistan. Smuggling dramatically declined to 25,000 tons in 1999-2000 when import duty was reduced to 60 per cent.

He said the history is repeating itself and feared that tea smuggling this year may rise to 40,000 tons.

In 2002, Afghanistan’s total tea imports totalled 34,000 tons. Kenya alone accounted for 24,000 tons, Bangladesh 3,800 tons and Indonesia 2,000 tons. All the tea imported by Afghanistan, being essentially a green tea consuming country, found way into Pakistani markets through illegal channels.

During the first quarter of 2003, Afghanistan’s imports from Kenya have almost doubled—from 5.5 million kgs in 2002 to 10.25 million kgs in 2003. Since 80 per cent of all Afghanistan- bound teas originate from Kenya — tea smuggling into Pakistan may reach to 40,000 metric tons this year.

“The only way to stop this smuggling is to take the firm but irrevocable step by reducing duty on tea imports to 10 per cent,” ex chairman PTA, M.M. Isky Ispahani said.

Two former PTA presidents, while talking to Dawn after the press briefing, said they favoured importing more tea from India.

“Imports will rise to five to six million kgs from three to four million kgs per annum in case India offers any concession under Free Trade Agreement (FTA), ex-chief of PTA Asghar Ali said.

He said Pakistan imported 3.6 million kgs worth $5m of tea from India in 2002 as compared to 3.7m kgs worth $6 million kgs in 2001.

“We usually buy tea from India for blending purpose as it is cheaper (than) from Kenya instead of using as a raw tea for consumption,” he said adding that trade volume always increases under FTA.