But Indian tyre companies say they cannot effectively monitor smuggling of their tyres into Pakistan. Considering that they sell their tyres directly in small quantities through local distributors, but mostly via the indirect trade route (Dubai), they say they are helpless.
The crux of the problem is this: Imported tyres in Pakistan attract a customs duty of 55 per cent excluding other duties. This makes imported tyres cost up to 40 per cent more than locally manufactures tyres. Smuggled tyres cost only about 3-4 per cent more than locally made tyres. Concerns about tyre smuggling into Pakistan also surfaced when tyres were retained by Pakistans commerce ministry on the negative list of the Afghan Transit Trade Agreement (ATTA) last week, after shedding about fourteen other items.
Apollo International (Apollo Tyres export arm) chief PSS Prasad told FE, sitting in India, beyond a point we are helpless. We sell our tyres to Dubai dealers and forget about them. We dont care where they go from there. This may go against us in the long run, but we cannot do anything about it.
Apollo Tyres claims a 25 per cent share of the Pakistan tyre market. Nearly 35 per cent of the companys exports is to Pakistan, reaping about Rs 10 crore annually.
JK Tyre, the other Indian player which also exports to Pakistan, reaps about Rs 40 crore annually from these exports. JK Industries vice-president (international sourcing and sales) HK Chopra told FE, it is difficult to keep track of smuggled tyres. There is no way of telling where tyres go after we send them to Dubai.
However, we wish to do our business directly with Pakistan. There is such a wastage of freight because of lack of bilateral trade. All of this can be sorted out if there was direct trade.
Indias Automotive Tyre Manufacturers Association (Atma) director general D Ravindran told FE, the monitoring process is restricted up to the dealer phase in the export market. In this case, it is Dubai and Singapore. Ideally, yes monitoring should be possible right to the end to make sure no contraband tyres are brought into the Pakistan market, but trade is too complex to actually know where and how tyres go.
Pakistans truck and bus tyre market, in which Apollo and JK Tyre ply, comprises 1.2 million tyres. Out of which 0.25 million tyres are manufactured locally, and 0.95 million are imported from other countries.