Imported industrial raw materials: BMP opposes govt's tariff cut reversal decision

Business Recorder

14 hours ago

LAHORE: The Businessmen Panel (BMP) of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly opposed the federal government's recent decision to reverse tariff cuts on imported industrial raw materials, warning that the move will severely damage domestic industry, accelerate inflation, and weaken the country's already fragile export performance.
BMP Chairman Mian Anjum Nisar criticized the imposition of additional duties on essential raw materials, stating that the policy shift is regressive and anti-industry at a time when the manufacturing sector is already struggling due to high energy costs, interest rates, and policy uncertainty. He said that restoring duties that were earlier removed under the Tariff Rationalization Policy will disrupt supply chains and increase the cost of doing business for import-dependent industries.
Mian Anjum Nisar said the government's reversal of its own tariff relief measures sends a negative signal to both local and foreign investors. He pointed out that the Tariff Policy Board had originally implemented duty cuts to support industrialization and value addition, aligning with the government's broader economic goals. However, the recent reversal appears to prioritize short-term revenue collection over long-term economic sustainability.
He argued that in the current climate of persistent inflation, sluggish industrial activity, and declining exports, any policy that increases the cost of industrial inputs will have a cascading negative effect on the entire economy. 'Reinstating duties on raw materials—especially those not locally produced—is like punishing the productive sector for the government's fiscal mismanagement,' said Nisar.
'This is not the time to choke industry; it is the time to revive it.'
The BMP chairman noted that many small and medium enterprises (SMEs) rely heavily on imported raw materials for their survival. These businesses are already under stress due to a lack of financing, low demand, and rising utility bills. The re-imposition of import duties will add another layer of pressure, pushing many SMEs toward closure or informal operations. He urged the government to reconsider its decision and hold consultations with stakeholders before implementing such drastic changes in trade policy.
Mian Anjum Nisar emphasized that the competitiveness of Pakistani exports is directly linked to the availability of affordable and high-quality inputs. With global competition tightening and regional countries offering subsidies and incentives to their industries, increasing duties on raw materials will only widen the gap between Pakistan and its competitors. He said that the country cannot hope to boost exports while making it more expensive for its industries to produce goods for international markets.
He also highlighted the contradiction in the government's approach, where it claims to support export-led growth while simultaneously making raw materials more expensive. 'You cannot have it both ways. If you want exports to grow, you must reduce input costs. Reversing tariff relief and imposing duties will achieve the opposite,' he said.
Nisar stated that the business community fully understands the government's fiscal constraints but argued that the solution should not come at the cost of destroying industrial viability. He urged the Ministry of Finance and the Tariff Policy Board to identify alternative revenue sources that do not penalize the formal industrial sector.
'We are willing to cooperate in developing realistic proposals that can generate revenue without hurting economic growth,' he added.
He also warned that the increase in duties will ultimately be passed on to consumers in the form of higher prices, further fueling inflation. This will erode the purchasing power of the masses, reduce consumer demand, and shrink the domestic market for manufacturers. He said this inflationary cycle will be counterproductive to the government's own growth targets and will deepen the recessionary environment in the country.
Referring to international best practices, Mian Anjum Nisar said that countries seeking industrial growth typically reduce import tariffs on raw materials to facilitate manufacturing and exports. Pakistan must follow a similar path if it hopes to become competitive in the global market. He stressed that duty-free or low-duty access to industrial inputs is a fundamental requirement for any modern economy and that reversing this principle reflects poor policy planning.
He called on the Prime Minister and the relevant ministers to intervene and suspend the new duties immediately. He also urged the National Tariff Commission and the Ministry of Commerce to present an impact assessment report on how the reversal of tariff relief would affect various sectors, especially textile, engineering, pharmaceuticals, and food processing industries.
In conclusion, the BMP chairman reiterated his appeal for a more industry-friendly and export-oriented policy framework that supports economic recovery rather than hindering it. He said the business community has always stood by the government during difficult times but warned that continued neglect of industrial challenges will result in long-term damage to the economy. He called for urgent dialogue between the government and trade bodies to arrive at a consensus that balances fiscal needs with industrial survival and growth.
Copyright Business Recorder, 2025