KARACHI: The cost of raw materials used in tyre manufacturing has increased by 25 percent during the last six months that led to the current increase in the prices of new tyres in Pakistan.
According to the spokesman of General Tyre, the prices of tyres have been affected by a number of factors including global raw material prices increase, supply chain disruption because of Covid, depreciation of the rupee and increase in utility prices.
Furthermore, he said the pandemic had disrupted the global supply chain and delay in shipments was quite frequent those days while the prices of containers also shot up because of the shortage.
“Another major reason was the depreciation of the rupee against other foreign currencies,” said the spokesman, adding the higher utility prices had also impacted the industry as a whole as due to outages of natural gas they were forced to use expensive alternate fuels.
On the other hand, he said, the imports were currently down because of the volatility in the currency market and the government’s demand of 100 percent advance payment on letters of credits.
“Smuggling should never be a viable option to meet the demand of a country as they both cripple the local industry and cheat the government in terms of its legitimate revenues which should never be tolerated,” the spokesman said.
He said the local tyre industry was capable of growing and supplying tyres to the market, adding the current gap was due to heavy under invoicing and smuggling which were the reasons the local industry was not flourishing.
He said it was not correct that the drive against smuggling was the reason for the price increase though those efforts the government had attracted investment and as a result foreign manufacturers were setting up plants in Pakistan.
“The local industry asks for a level playing field as it would raise tax revenue and also create employment in this testing time,” said the spokesman, adding the same had been done by the local industry in the manufacturing of farm and motorcycle tyres where imports were nonexistent.
Copyright Business Recorder, 2021
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