KARACHI, July 14: Tea smuggling continues to thrive unabated and it is estimated that 48,000 tons of the commodity were brought illegally in the country during FY06 as compared to 40,000 tons in FY05, thus inflicting a revenue loss of Rs2bn to the national kitty.

In contrast, the legal tea imports declined by 12.5pc to 114,000 tons in FY06 from 130,000 tons in FY05, figures and documents, sent by Pakistan Tea Association (PTA) to the commerce ministry, revealed.

The association said that arrival of tea under Afghan Transit Trade Agreement (ATTA) only from Kenya had shown an increase of 9,000 tons or 40pc to 32,610 tons in FY06 from 23,610 tons in FY05.

Tea is also being brought under the ATTA from several other countries namely China, India, Indonesia, Vietnam etc., which amounted to approximately 15,000 tons.

The cumulative impact of duty and taxes on import of tea through legal channels comes to 33pc while smugglers pay only 8-10pc. For instance, importers clear the tea at $2 per kg (Rs120 per kg) while smugglers, in connivance with customs officials, manage to clear tea with Rs30-50 per kg less, Chairman PTA Muhammad Altaf told Dawn on Friday.

The government has not reduced the import duty on tea in the budget. In case it is not slashed in the trade policy for 2006-07 then the share of smuggled tea will further rise and legal imports will decline to 100,000 tons during this fiscal, he said.

Out of total legal imports of 114,000 tons, the share of packers (Unilever, Tapal, Tetley, etc.,) is estimated at 70,000 tons while the rest is imported by the traders who sell tea in loose form in the open markets.

He urged the commerce ministry to delete black tea from the positive list of ATTA or restrict it to maximum 8,000 tons or impose the entire tariff applicable on imports into Pakistan for all tea arrival under the ATTA.

PTA figures revealed that Pakistan imported 114,000 tons of black tea from 21 countries at an average rate of $1.69 per kg in FY06 compared to 130,000 tons from 19 countries at an average rate of $1.59 per kg in FY05.

The share of tea imports from Kenya declined to 65,511 tons ($1.89/kg) in FY06 from 83,176 tons ($1.73/kg) in FY05 due to rising prices in Kenya because of the drought. Altaf said that Kenya’s black tea production had been short by 37 million kg during January to May this year compared to same period of last calendar year.

Due to increase in Kenyan tea prices, leading packers in Pakistan had enhanced the rate of their brands by 7-8pc in April-May.

On the other hand, frequent exchange of delegations of the PTA and Indian Tea Board and leading packers of India in FY06 had resulted in doubling tea imports in Pakistan to 9,538 tons as compared to 5,000 tons in FY05 at an average price of $1 per kg. Usually leading packers import Indian tea for blending with high quality tea.

Besides black tea, Pakistanis also sipped 1,500 tons of green tea in FY06 as compared to 1,200 tons in FY05. The average price of green tea import was less than one dollar per kg and it was imported from China, Sri Lanka, Vietnam, Bangladesh and Indonesia.