KARACHI: The government is losing around Rs15 billion every year due to the smuggling of more than 2.5 million new and used tyres into the country.

Industry sources said it is a huge blow to the local tyre industry, the government and consumers. Governments world over protect their industries, but in Pakistan the situation is quite reverse, they said.

Used winter tyres, which are not suitable for hot climate, have also been smuggled into the country. Except for the cement industry which is allowed to use tyres as an alternative fuel, used tyres are banned in Pakistan. Yet, they are being smuggled in and sold to the public.

Brand new tyres produced years ago, hence expired from safety and quality point of view, are routinely being smuggled in and re-stamped with fresh dates locally, cleaned and then wrapped before being sold to unsuspecting consumers.

A tyre maker said the government adopts an easy way out to deal smuggling by suggesting reduction in duties and taxes. However, this does not work as duty on truck/bus radial tyres from China is zero per cent but tyres are still smuggled in. Instead, the government should curb this menace by strong administrative measures and check at the borders.

The imports in Afghanistan through the Transit Trade are far more than their actual requirements and the excess stuff is earmarked for smuggling into Pakistan through the two land routes namely Chaman and Landi Kotal, the manufacturer said, adding that the loss of duty/taxes on other vehicle items would amount to a loss of another staggering sum of Rs20bn.

Overall losses due to smuggling of items like tyres, cigarettes, tea, cosmetics, toiletries, and consumer goods probably works out to Rs50bn a year, the local industry official said. “This huge amount should come in to the government’s treasury.”

Meanwhile, sources said officials posted at the border are paid for a truck loaded with smuggled goods worth around Rs10m. Around 250 trucks per day carrying mostly tyres and other items make their way into Pakistan and one can only imagine how much the corrupt mafia makes from these consignments, the sources added.

After a long debate between industry, importers and the Federal Board of Revenue, the import trade price (ITP) on import of tyres was raised by 3pc to 20pc, but industry people said this rise would neither increase revenues nor protect the local tyre industry.

Meagre 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 increasing the ITPs, there is also a need to curb under invoicing and misdeclaration.

A tyre maker said the government should instruct the valuation department to increase the ITPs by another 30pc in case of Chinese imports and by 20pc in other origins, including India. As per details, no increase has been made in ITPs for tyres coming from Japan.

Majority of tyre imports (around 50pc) are coming from China and the average increase in ITP for them has been just 14pc versus the industry’s demand of 50pc.

The second biggest imports are from countries like South Korea, Thailand, Indonesia, etc, which accounted for 25pc of total imports during 2012-13, and the average increase made by the customs in ITP was only 8pc versus the industry’s demand of at least 30pc.

Moreover, India accounts for 60pc 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 3pc.