Menace of tire smuggling

Tire smuggling is the illegal import or export of tires, typically to avoid paying taxes or tariffs. This can have several negative effects, including unstable legal businesses, reduced revenue for governments, and potentially contributing to the dumping of cheap, substandard tires on the market. Additionally, illegally imported tires may not meet safety and environmental standards, which can put consumers at risk. Unchecked tire smuggling damages the local industry in Pakistan and it is suffering billions of rupees in losses because of the growing tire smuggling crisis. One of the areas where massive under-invoicing and smuggling is ongoing right under the nose of the Federal Board of Revenue (FBR) is the tire sector. The sector is heavily dependent on imports, making it a lucrative opportunity for smugglers. In the presence of current tire smuggling and under-invoicing, tire companies feel reluctant to invest in Pakistan.

Pakistan does not have any company that produces truck or bus tires at the capacity that is needed, while it has hardly one or two manufacturers who produce passenger car tires. The manufacturing companies meet 23% of the total tire demand in the country, while according to industry estimates, the country imports 40% of the tires from different countries. The remaining 37% of the market share is in the hands of tire smugglers who use different routes to bring used and refurbished tires into Pakistan.



The market is of the opinion that unless the government begins to take serious measures to control such practices, the situation will remain unchanged. Because of the pervasive smuggling, new investors will be hesitant to invest in Pakistan, and the shortage of premium quality tires in the country will continue. If the tires are imported through proper channels, they can raise additional revenue for the government and increase the employment rate by supporting the local tire industry.

High-quality tires that are legally imported bring along several advantages such as a boost in safety, fuel efficiency, a longer tread life, environmental sustainability, and extraordinary vehicle performance. It has been tested and confirmed that tires that meet safety standards offer greater traction, braking, and handling, which can help lower the risk of accidents. High-quality tires are made to offer less rolling resistance, which can aid in enhancing a vehicle’s fuel efficiency. Since legal tires are composed of high-quality materials and are built to last, doing so can ultimately save money. Since legal tires must abide by certain environmental regulations, they can lessen the pollution brought on by tire waste and other tire-related problems. High-quality tires are designed to provide better performance, which can enhance the overall driving experience.

Tire smuggling in Pakistan has had a significant negative impact on the country’s economy. The illegal import of used and substandard tires harms domestic manufacturers and sellers, who are unable to compete with the lower prices offered by smugglers involved in smuggling. Furthermore, the use of these substandard tires on vehicles can lead to accidents and further damage to the roads, leading to additional economic costs. The government has attempted to curb smuggling through various measures such as increasing customs duties, but the problem persists due to corruption and lack of enforcement. Numerous local industries either failed to exist or relocated as a result of the unlawful trade, which resulted in a significant loss of jobs and foreign currency.

Sources

Abbas, G. (2019, November 19). Local industry irked as tyre smuggling continues unabated. Profit by Pakistan Today. https://profit.pakistantoday.com.pk/2019/11/19/local-industry-irked-as-tyre-smuggling-continues-unabated/

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