Import duty on raw material raises cost of products

The imposition of 5 to 15 per cent import regulatory duty on a number of items used as raw material by local manufacturers has increased the cost of finished products.

Talking to Dawn, Zeeshan Merchant, former secretary-general Karachi Tax Bar Association (KTBA), said though the SRO 131(1)/2015 imposed regulatory duty on luxury goods, but it also covered five/six items used as raw material by local industry.

Merchant pointed out that as per SRO 131(I)/2015, raw material with Pakistan Customs Tariff Code 7602.0090, 7204.5000, 7204.4990, 7204.4100 and 7204.3000 have been subjected to regulatory duty.

Giving details, he explained these pertained to regulatory duty on import of aluminium waste or scrap used to manufacture aluminium alloy ingots which are widely used by automobile and fan industries.

About 10 years back, he said, aluminium alloy ingots were being directly imported to meet the domestic demand of such industries. However, when manufacturing technology for aluminium alloy ingots was introduced, imports of ingots came to halt.

However, imposition of 5pc regulatory duty has made manufacturing of ingots uncompetitive as imported aluminium alloy ingots are cheaper.

It is difficult to understand, he said, the logic behind imposing regulatory duty on imports of raw material and allowing free import of finished products.

Merchant urged the Federal Board of Revenue (FBR) to look into the anomaly and fix it.