Government’s U-turn to protect local industries slows down pace of reduction in regulatory duties
ISLAMABAD: The federal government has withdrawn its decision to completely eliminate or reduce regulatory duties on about 285 imported products during the next fiscal year and approved the imposition of new duties.
According to sources, the government had decided to eliminate or reduce regulatory duties on 1984 tariff lines with a target of 52 percent reduction in protection for local industries under the five-year new tariff policy plan, but now after reviewing 285 of them, new duties will be notified on Monday.
The Policy Board approved the restructuring of regulatory duties, which will reduce the projected revenue deficit from Rs200 billion to Rs174 billion.
In the first phase, there was a plan to reduce duties on raw materials and semi-finished products, but the government had also reduced duties on locally manufactured finished goods, which raised fears that industries would suffer losses due to Chinese competition.
According to sources, some members of the steering committee warned Prime Minister Shehbaz Sharif that if the expected increase in exports does not occur, then foreign exchange reserves may be damaged. After the review, no changes will be made to 970 tariff lines instead of 828 during the first year, while 142 items will be transferred to slabs on which a rate of 20% or less is applicable.
Similarly, it was decided to reduce the regulatory duty by 20% on 602 items, which has now been reduced to 538 lines, and 64 lines will no longer be reduced.
According to the Prime Minister’s Advisor on Commerce Rana Ehsan Afzal, the target of reducing the average tariff rate from 20.2% to 9.7% in five years remains.
