Karachi, May 21, 2024 – The Karachi Chamber of Commerce and Industry (KCCI) has called for the elimination of regulatory duty (RD) on the import of steel products in its budget proposals for the fiscal year 2024-25.
The KCCI highlighted discrepancies in the current tax regime, which it claims is inconsistent and detrimental to various stakeholders in the steel industry.
In the Finance Act of 2021, customs duty (CD) and additional customs duty (ACD) on Hot Rolled Steel, under HS Codes 7225 and 7208, were abolished. However, the regulatory duty persisted for both commercial and industrial importers, except for those importing under SRO 606(I)/2015. This exception has created an uneven playing field within the industry, the KCCI noted.
Although the regulatory duty on Hot Rolled Alloy Steel (HS code 7225.3000) and Hot Rolled Non-Alloy Steel (HS code 7208) was reduced from 17.5% to 5%, it remained unchanged for Cold Rolled Steel (HS code 7209) and Galvanized and other coated steel (HS code 7210). The KCCI has proposed either the complete removal of RD on these HS codes or the withdrawal of exemptions to rectify the discriminatory tax regime.
The KCCI underscored that such regulatory duties were never imposed during the operational period of Pakistan Steel Mills Corporation (PSMC), suggesting that current policies provide undue preferential duty protection to private sector industries. In contrast, national corporations and industries have not received similar benefits, leading to an uneven competitive landscape.
Steel materials, which serve as industrial raw materials, require further processing in machinery-equipped industries before use. The existing duty disparity has led to financial disadvantages for many industrial players who rely on these raw materials for production.
The KCCI pointed out that the imposition of RD on essential, non-luxurious items has resulted in significant financial losses for the national exchequer. This situation is exacerbated by the limited relief extended to only a select few entities under SRO 565(I)/2006 and its subsequent amendment via SRO 606(I)/2015.
By advocating for the removal of RD on steel imports, the KCCI aims to promote fairness and competitiveness in the industry. The chamber believes that aligning the duty structure with historical practices observed during the operational period of PSMC and extending equitable benefits across the board will support industrial growth and economic stability.
As the government prepares to finalize the budget for 2024-25, the KCCI’s proposals seek to address the existing inequities in the steel import duty regime, fostering a more conducive environment for industrial development and economic progress in Pakistan.