Increased Tire Smuggling Disrupts Local Industry

The industry is concerned about the resurgence of smuggled tires in local markets. It blames the problem on a decline in imports after the devaluation of the rupee and has called on the government to reduce the amount of tires entering the country through unofficial means.

The chief executive of a major player in the sector expressed grief at the easy availability of illegal tires in all sizes. He lamented that the government’s action last year had brought about a short halt to smuggling activities, but that things had since returned to normal, giving smugglers carte blanche. Hussain Kuli Khan, CEO of the Ghandhara Tire and Rubber (GTR) Company Ltd, said in a statement:

“The local industry is the backbone of any economy and it’s a primary responsibility of the government to protect and safeguard the local industry’s interests so that in return they can create employment opportunities, pay taxes to the national exchequer and save forex for the country.”

The import of tires had decreased due to the rupee’s devaluation against the US dollar and this shortage had been filled by the heavy influx of smuggled tires, he claimed. He said that even though smuggled tires were of inferior quality, people were buying them due to their low prices without knowing the repercussions.

According to Mr. Khan, the country consumes 14.5 million tires annually; only 25% of this need is fulfilled by domestic manufacturers, and the remaining 10% is met by authorized imports. He claimed that the remaining portion entered the market through illegal means, harming local producers severely and costing the national exchequer more than Rs 70 billion annually.

Mr. Khan encouraged the authorities to reassess the data about the goods being imported through the Afghan Transit Trade (ATT) and determine whether the quantity of tires being imported is commensurate with the number of automobiles in Afghanistan. He stated that goods that were sold as ATT were either smuggled back from the Afghan border or unloaded in Karachi. He urged the government to take action on this matter.

He claimed that in addition to creating jobs, the local industry was fulfilling its obligation to the national exchequer, with GTR alone bringing in over Rs3.2 billion annually. Mr. Khan demanded that the government take tougher action to stop the smuggling of tires in order to level the playing field for domestic producers.

The country’s imports of tires and tubes fell to 1.75 million units (costing $44 million) in the first half of the current fiscal year from 1.892 million ($67 million) in the same period last year, according to the Pakistan Bureau of Statistics.