Exclusion of tiles from PTA with Iran sought
KARACHI: The local manufacturers have demanded that tiles should not be included in the preferential trade agreement (PTA) with Iran.
“The core of the PTA should be to enhance trade for those items which are not produced in each other country. Trade between the two countries is essential, but it should not be at the cost of local industry,” said All-Pakistan Ceramics Tiles Manufacturers’ Association.
The association recalled that the PTA with China made a disastrous impact on local industry and led to closure of several plants, while others are working under capacity.
In case the government includes tiles in the PTA, it would lead to closure of more units. Iran has more than 300 plants, which are getting full support of their government in terms of subsidised input cost, like gas.
In Pakistan, gas tariff is continuously increasing. Roughly these are around 40 per cent of the product cost while in Iran, these are barely three to four per cent.
The rate of duty on finished tiles is just 20pc which was 30pc two years ago. Under PTA, if it is further reduced, the local industry would be unable to survive, the association said.
On price impact when Iran would find new foreign markets for its tiles, the association said that the industry works on volumes. In case volumes will go up in Iran due to lifting of sanctions, this will assist them to be more competitive in the global market.
Smuggling of tiles
It further stated that lifting of sanctions on Iran may not halt illegal arrival of Iranian tiles into Pakistan.
The local market, it said, is almost captured by imported tiles and local tiles are losing share continuously.
The main markets for Iranian tiles are in the geographical region of Iraq, Yemen and Syria, but these countries are facing serious issues. In this situation, Pakistan may continue to witness arrival of illegal tiles from Iran for some time, the association said.
The association said that in the long term, lifting of sanctions may have a positive impact on illegal import, while in short term status quo would remain.
Finding hard to ascertain the total quantity of tiles coming through grey channels, the association estimated influx of 750,000 metres of Iranian tiles per month or more than eight million metres per annum. The number of people selling Iranian tiles has doubled in the last few years, it said.
Recently due to actions taken by the Federal Board of Revenue (FBR) and border security agencies, there has been some decline in grey imports from June onwards, it added.
Published in Dawn, August 30th, 2015
On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play