KARACHI: The local tyre industry has termed the Import Trade Prices (ITPs) as major obstacle to the growth, urging the government to re-evaluate ITPs and provide a level playing field to the industry.
“With the development of the auto sector in Pakistan, new possibilities are also emerging for the tyre industry but low ITPs of imported tyres are nullifying these possibilities,” said Hussain Kuli Khan, CEO, General Tyre and Rubber Company of Pakistan Limited.
It is a good sign that renowned automobile companies choosing Pakistan to build their assembly plants besides some foreign tyre manufacturers also signed joint ventures.
“In these circumstances, the future of the automobile industry and its allied industries looks very vibrant. Therefore, the local tyre industry will be geared up to meet the ever rising demand of tyres in Pakistan,” said Hussain. He however said that this was dependent on how the government could ensure averting the menace of smuggling under-invoicing.
The new players in the auto industry have diversified the local tyre manufacturing by increasing demand of new sizes of tyres especially with the induction of crossovers and SUVs.
“This is why the development of the first 18 inch tyre for SUVs has been initiated by General Tyre. This is good news considering how badly covid-19 affected the local tyre industry,” said Hussain.
The local tyre industry needs government support in formulating and executing sustainable long term policies because low ITPs is a serious challenge restricting the local tyre industry to invest more in the manufacturing facilities, he maintained.
It is pertinent to mention here that the annual consumption of tyres in the country is around 10 million tyres excluding TBR and motorcycle tyres and local tyre industry contributes 18-20 percent of the country’s demand while imports are accountable for 15 percent and the rest is undocumented or smuggled.
He termed the ITPs, which was last amended in August 2018, as major obstacle to the growth of the industry as since then the raw material prices have witnessed an average increase by over 24 percent and the valuation gap gave imported tyres an unfair advantage over locally made tyres, he said and advised to review ITPs values at least twice a year or a quarterly basis, which would not only encourage the local tyre industry to invest in expanding its production capabilities but also increase revenue collection and reduce import bills.
Copyright Business Recorder, 2021