ISLAMABAD, May 26: The government is likely to reduce the customs duty on raw materials to 5 per cent from 10 per cent in the forthcoming budget 2003-04.

Well-placed sources told Dawn on Monday that the proposal was under consideration on the recommendations of the ministry of industry and production.

The major beneficiary of the reduction in tariff if considered would mostly be ceramics, pesticides and plastic products.

The sources said that the tax officials were opposing the proposal on the grounds that the reduction might hurt the local supply of the raw materials.

“We have conveyed to the ministry that the reduction will not only result in harm to local production of raw materials but will also result in decline in customs collections”, sources said.

The sources further said that the reduction would also result into heavy imports of these raw materials, which might eat up a big chunk of our foreign exchange.

Officials in the ministry of industry told Dawn that the proposal was aimed at countering under-invoicing of these products besides it would also reduce the incidence of smuggling.