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| KARACHI: Tiles on display at a local showroom. |
KARACHI: Ceramics and tiles should be dropped from the list of products given duty-free access under free trade agreement (FTA) with China to save the local industry.
“The government should exclude tiles from the FTA with China which is being renegotiated,” said Tiles and Ceramics Manufacturers Association (TCMA) in a communique to the commerce ministry.
“Policy-makers should understand vulnerable condition of local tile industry while making policies or negotiating trade deals. The industry has already invested around Rs40 billion so far despite facing stiff challenges.”
Dumping duty on Chinese tiles sought
A study by the National Tariff Commission also indicates that there is a serious injury to the local industry and recommended that dumping duty be placed on tiles from China.
Making ceramics and porcelain tiles part of FTA with China would hurt the local industry, said the association, adding, the government should support the industry and review ITP on Chinese tiles.
The industry, they claimed, is saving foreign exchange by using local raw material. Pakistan has adequate production capacity of over 60 million square metres of tiles not only to meet local demand but to export as well. However, a lot of production capacity remains idle as last year 15m square metre tiles were imported from China alone.
“This invasion is detrimental to the industry with lower duties applied on imported tiles from China while further damage is done by low import trade price.”
A trend of decrease in ITPs of all tile exporting countries has been seen from the year 2010 to 2015. Lower ITP has increased imports from China and this trend is hurting the local manufacturing industry badly.
Different factors, including high tariff, price-hike, lower GDP, poor law and order, low level of income and lower ITP have given tough time to the industry. Despite these challenges, the government through FTA and by reducing ITP strengthened import from China that hit the local industry, and last year a major manufacturer from the ceramics industry had to shut down its plant due to losses.
The association said that rampant under-invoicing/mis-declaration of imported tiles and lower ITP with China and other countries is endangering livelihood of some 10,000 families who are directly or indirectly depending on growth of local tile industry.
Local ceramics and tile industry consumes raw material produced in the country and supports the development of other indigenous sectors while in contrast imported tiles not only eat up share of local tile industry, but also pushing allied emerging sectors to wall.
The cost of production is rapidly rising in China and their minimum wages are three times higher than Pakistan. Under this scenario, it seems illogical that the prices of tiles could go down in China whereas the ITPs of Chinese tiles have reduced from $4.57 per square metre in 2011 to $2.51 in 2013.
Published in Dawn, April 5th, 2015
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