Hike in local tyres’ prices attributed to surge in rates of raw material

LAHORE: The increase in the prices of local tyres is due to a global surge in the raw material prices used in tyre manufacturing. This is not only impacting prices of tyres but other products as well. Another reason is increase in shipping costs due to the pandemic, a spokesman of General Tyre, said.

The backlog of shipping containers has caused the freight prices to skyrocket; however, it’s expected to come down by next year. The higher utility prices have also impacted industry as a whole as due to outages of natural gas they are forced to use expensive alternate fuels, the spokesman added.

“We request the government to provide level playing field to local industry as it would help raise tax revenue and also create employment in this testing time,” said the spokesman. He said that it is not correct that the drive to curb smuggling of tyres is behind the price escalation of tyres. “This is akin to people complaining that there are no criminals in the streets because the government has put them in jail,” said the spokesman.

The spokesman maintained that smuggling is defined as to import or export secretly contrary to the law and especially without paying duties imposed by law therefore the smuggled goods are cheaper and illegal. “Smuggling and under-invoicing cripple the local industry by making it really difficult for manufactures and genuine importers to thrive in these conditions,” reasoned the spokesman, asking why smuggling has been accepted as a positive factor in the supply of a product.

“The local industry is supporting the national economy by paying its due share of taxes/ duties and providing employment to thousands of people directly and indirectly,” said the spokesman.

Also, he added, being an import substitute industry, it also saves precious foreign exchange. “The local industry needs a level playing field though the government is taking steps to help the local industry grow,” said the spokesman, adding that these efforts have attracted investment and foreign manufacturers are setting-up plants in Pakistan.

“Imports are currently down because of the volatility in the currency market and the government’s demand of 100 percent advance payment on letters of credits,” said the spokesman. He added that once these matters are settled, the smuggling and under-invoicing will again start hurting the local tyre industry.

Copyright Business Recorder, 2021