Azeem Ahmed Khan

Pakistan Association of Large Steel Producers (PALSP) has called upon the government to take concrete action to curb steel smuggling from neighbouring countries via land routes. The association said smuggling is not only undermining the domestic steel industry, but also leading to massive tax evasion. The PALSP General Secretary Syed Wajid Bukhari emphasised the need for immediate and comprehensive measures to halt rampant smuggling. “Failing to address this issue promptly could have dire consequences for Pakistan's steel sector,” he said. The PALSP has raised concerns about significant quantities of illegal steel bars entering the Pakistani market, primarily originating from Iran and Afghanistan, which poses a threat to domestic steel industry. “The widespread smuggling of steel bars from Iran and Afghanistan has reached a point where the survival of Pakistan's steel sector is at stake,” he elaborated.

Wajid expressed concern over the absence of weighbridges at customs check posts in Balochistan province. He said there was no scanner at the customs check posts in Balochistan and Khyber Pakhtunkhwa provinces to monitor the traffic. The steel industry in Pakistan is currently grappling with a range of challenges, including substantial currency devaluation, rising financial burden, and escalating input costs -- electricity, petrol, transportation, etc. “Presently, various mills have shut down and the remaining are operating at minimal capacity,” Wajid said. He cautioned that without swift intervention, irreparable damage could be inflicted to the domestic industry which feeds over 45 downstream industries. According to the PALSP estimates, nearly 500,000 metric tonnes of steel is illegally smuggled into Pakistan each year from neighbouring countries.

This represents approximately 10% of the country’s total steel production and translates into a loss of Rs25 billion in annual tax revenue. In contrast, the PALSP's member companies collectively produce 70% of total long steel in the country, and significantly contribute to the national treasury. Wajid underscored the far-reaching repercussions of this pervasive smuggling, citing potential job losses. He emphasised that the adverse impact could extend beyond the steel sector, potentially affecting Pakistan's overall economy, which relies on substantial investments in the steel industry. “The detrimental effects of smuggling have been particularly devastating in Balochistan, where the domestic steel industry has been undermined,” Wajid pointed out. "

In Balochistan, over 80% of steel being sold is brought from Iran through smuggling, under-invoicing, false declarations, and other irregular evasive means," he added. Lax inspections have allowed smuggled steel to infiltrate into other regions of the country, including major cities like Lahore and Karachi, he claimed. In response to the PALSP's appeals, the government has initiated crackdowns on smuggling networks nationwide. Regrettably, he said, these efforts have yielded only temporary relief and failed to provide a lasting solution. To develop its economy, Pakistan must make and consume a lot more steel, but the country merely consumes 42kg per capita, against the world average of 256kg per capita.

The PALSP general secretary said the steel industry serves as a vital component for various sectors, including construction, engineering, automotive, and defence. “To realise its potential as a steel-exporting country, Pakistan must enhance the competitiveness of its steel industry on the global stage,” he emphasised. Wajid advocated a ban on land-based steel imports and also called for establishment of additional checkpoints equipped with advanced scanning technology to curb smuggling. He also proposed digitising procedures to improve efficiency. Furthermore, Wajid underlined the significance of imposing rigorous penalties to discourage both individuals directly involved in smuggling, and those who are complicit in concealing such activities.

Credit: INP-WealthPk