KARACHI: The resurgence of smuggled tyres in local markets has perturbed the industry, which attributes the issue to falling imports following the rupee’s devaluation and has urged the government to curb the influx of tyres coming into the country from illegal channels.

The chief executive of a key market player has regretted that smuggled tyres of all sizes are now easily available in the market. He lamented that the temporary halt in smuggling activities last year due to government intervention had since reverted to its former state, allowing smugglers to operate with impunity.

“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,” Hussain Kuli Khan, CEO of the Ghandhara Tyre and Rubber (GTR) Company Ltd, said in a statement.

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

Mr Khan said the country’s annual tyre consumption stood at 14.5 million units, with domestic production satisfying only a quarter of this demand and a mere 10 per cent met through legal imports. The remainder, he said, filtered into the market through illicit channels, costing the national exchequer over Rs70 billion each year and inflicting severe damage on local manufacturers.

Tyres coming through illicit channels costing exchequer over Rs70bn, makers say

The GTR CEO said the heavy influx of smuggled tyres could be gauged by the actions of the Collectorate of Customs Enforcement, which confiscated over 55,000 smuggled tyres, mainly of bigger cars, in Karachi last year. Those tyres were worth around Rs540 million, he said.

The smuggled tyres arrived in substandard conditions, exhibiting torn tyre beads and structure that too, along with tampered dates, he said. Subsequently, the smugglers employ mechanical tools to rectify the deformed tyres, significantly diminishing their operational lifespan and posing a considerable risk to public safety.

Additionally, forged documents are circulated to make these tyres appear identical as per the import goods declarations (GDs) of other imported consignments.

Mr Khan urged the government to re-evaluate the data of the items being imported via the Afghan Transit Trade (ATT) and see if the numbers of tyres being imported are supported by the number of vehicles in Afghanistan. Items under the guise of ATT were either unloaded in Karachi or came back from the Afghan border via smuggling, he said, urging the government to address this issue.

He said the local industry was playing its role in providing revenue to the exchequer along with providing employment, with GTR alone contributing over Rs3.2bn each year to the national exchequer.

Mr Khan called on the government to adopt more stringent measures to curb tyre smuggling, thereby levelling the playing field for local manufacturers.

According to the Pakistan Bureau of Statistics, the country’s tyre and tube imports plunged to 1.75m units (costing $44m) in the first half of the current fiscal year from 1.892m ($67m) a year ago.

Published in Dawn, February 6th, 2024