ISLAMABAD: Prime Minister Imran Khan has asked the National Tariff Commission (NTC) to compile duty structure including regulatory duties on essential food items which have led to an increase in domestic food inflation, a senior official told Dawn on Tuesday.

The NTC has been directed to compile the report in the next couple of days to identify all essential food items which were subjected to duty, taxes and regulatory duties.

“We have started work on identifying all food items subject to additional customs”, Chairperson NTC Rubina Athar told Dawn. She added that the commission will present a report to government for consideration.

The government has taken away the power of imposing or removing duty from customs department and given it to NTC.

After coming into power the PTI government imposed regulatory duties and introduced non-tariff barriers to discourage imports as part of its policy to bring down overall import bill.

The import of fruits and vegetables were linked with quarantine certification requirements at border stations with Iran and Afghanistan. However, the requirement of no-objection certificate (NOC) is mostly unmanageable, according to traders.

According to an official report, the import of fruits and vegetables from Iran and Afghanistan fill the gaps during the arrival of new crops. “The combination of ill-timed government policies has led to disruption in supplies to domestic market,” the report noted.

As a result of these policies, the Federal Board of Revenue (FBR) is collecting 5.5 per cent income tax on import of tomatoes while there is no customs duty or sales tax on it. However, on the import of onion, the government charges 20pc sales tax and 5.5pc income tax only. On potatoes, the government collects 25pc additional customs duty, 17pc sales tax and 5.5pc income tax on import. Similarly, the government imposed 60pc regulatory duty (RD) on wheat, 25pc RD on wheat flour, 40pc RD on sugar and 5pc RD on boneless bovine meat (frozen).

On pulses, the government charges around 2pc income tax at import stage. Similarly, the duty structure is very high on import of palm oil from Malaysia and Indonesia. The changes in duty structure on palm oil can bring down edible oil prices in the domestic market.

“As a result of these duties and quarantine requirements, fruits and vegetables are going to India,” former president Federation of Pakistan Chambers of Commerce and Industries Daroo Khan Achakzai told Dawn. Pakistani authorities are also not accepting quarantine certificates of Afghanistan to allow entry of tomatoes and onions into the country, he added.

The prime minister has also tasked the Commerce Division and Food Security Division to come up with a detailed report clearly mentioning product wise production of essential food items in domestic market. The divisions were also asked to report food items which can be exported or imported seasonally.

“We have started work on this report,” a senior official of Commerce Division told Dawn.

Food inflation in urban areas rose by 19.5pc in January on a yearly basis and 2.7pc on a monthly basis whereas it increased by 23.8pc and 3.4pc, respectively, in rural areas.

The suspension of trade with New Delhi in the wake of Kashmir issue has also contributed to rising prices of vegetables in the domestic market.

Meanwhile, Pakistan’s rice exports increased by 15pc to $1.2bn in July-Jan period this year as against $1.05bn over the corresponding months of last year. In quantity, export of rice also witnessed 15.4pc growth during the months under review.

In bilateral trade with UAE, rice is Pakistan’s major exports. A Lahore-based rice exporter told Dawn that Pakistani exporters are supplying rice to Dubai-based importers who are repackaging the grain with Indian branding and selling it in European market.

Published in Dawn, February 19th, 2020