KARACHI: The prices of imported tyres have risen by an average 25 per cent from January till to date owing to massive rupee devaluation, imposition of regulatory duty (RD) and an increase in import trade price.
Importers are worried over the reports regarding further increase in RD and additional customs duty on luxury items, which include tyres, to compress demand and reduce the country’s ballooning trade deficit.
Pakistan Tyre Importers and Dealers Association (PTIDA) chairman Ashraf Dharani said the government believes that the tyres are luxury items but all over the world they fall in the category of essential items of daily use.
A random market survey revealed that Chinese tyres (175/70R13 and 185/65R14) now cost Rs7,000 and Rs8,500 as compared to Rs5,500 and Rs6,500 in January. Dunlop tyres (175/70R13 and 185/65R14) are now available at Rs8,950 and Rs10,750 as against Rs7,350 and Rs9,275.
As a result, the rates of second-hand tyres (without any puncture spots) have also risen sharply. A dealer at New M.A. Jinnah Road told Dawn that a set of four used Bridgestone or Good Year tyres (155/65/13) is now priced at Rs15,000 against Rs8,000-9,000 in January.
Further hike in duty likely to boost smuggling
Bridgestone (175/70R13 and 185/65R14) are selling at Rs10,500 and Rs13,150 as compared to Rs8,100 and Rs10,700.
The prices of locally manufactured tyres witnessed 8 to 11 per cent rise in the last one year.
Protecting local industry
The chairman further said the government has been highly supportive of the local industry which caters to only 23pc of the overall demand. He added that the imposition of RD historically had only promoted parallel economy.
Mr Dharani said market people have not passed on the full impact of the hike in the prices of imported tyres to the consumers. As a result of high incidence of duties and other factors, smuggled tyres still hold a sizable market share in an annual market demand of 10 million tyres, he said.
“Any increase in RD would bring tyre prices under further pressure and would give cushion to the smugglers to improve their market share,” he feared.
He said the annual demand for passenger cars is 4.85m tyres in which imports stand at 2.59m and the local industry produces 1.119m tyres. The rest is met through smuggled tyres.
Truck/bus tyres (radial and non-radial) demand is around 4m tyres while annual import is 1.4m and shortfall of 2.6m (radial 2.2m and around 400,000 non-radial tyres) is met through smuggling. There is no local industry for radial tyre manufacturing so far while 25,000 non-radial tyres are produced every year.
The annual demand for light truck tyres (radial and non-radial) is 4.5m tyres while annual imports are estimated at 1.44m tyres and the local industry makes 560,000 tyres. The rest of market demand is fulfilled through smuggling.
He said after an increase of 10pc in budget FY22, the current rate of RD on truck/bus tyre is 25pc while for light truck and car tyres it is 20pc.
In a nutshell, the total annual demand (barring bikes) is over 12.65m in which 5.5m tyres come through smuggling, he said.
The PTIDA chief claimed that smuggled car, light truck and bus/truck tyres are approximately 25-35pc cheaper than legally imported tyres.
He said that a delegation of PTIDA had met Commerce Adviser Abdul Razak Dawood ahead of budget FY22 and proposed reduction in RD on import of tyres but on the contrary the government increased RD to safeguard the local industry. “As a result, a large volume of legal trade has shifted to smuggling,” he deplored.
Published in Dawn, December 5th, 2021