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Govt to cut 600 tariff lines to boost import substitutions of consumer industries

Govt to cut 600 tariff lines to boost import substitutions of consumer industries

LAHORE: The government has approved hefty cuts including exemptions on raw materials under 600 tariff lines to boost import substitutions of consumer industries and promote exports from traditional and non-traditional sectors.

The decision will be announced in the budget 2021-22. There are also several other tariff lines that will be considered for lower duty reduction. In the budget 2020-21, the government has reduced tariff on 2,000 tariff lines.

Ahead of the next budget, the National Tariff Commission has submitted to the finance ministry a report that shows that tariff rationalisation plan of the government has led to industrial growth in the country. Exemption of duty on raw materials leads to its bulk import and subsequent exports of those industries.

As a result of this at sector level, exports of textile, articles of wood, rubber, plastic, glass, metal, chemicals and electrical appliances are significantly effected by change in intermediate input tariffs.

The study reveals that 1pc decrease in tariff leads to an increase in import volume by 2.8pc. Similarly, the price of raw materials (unit value) decreases by 0.6pc with a 1pc reduction in tariff at import level.