Genuine demand

President Islamabad Chamber of Commerce and Industry (ICCI) has demanded for reduction in import duty on industrial raw material as it has become expensive  because of currency depreciation which has  enhanced production cost of finished goods. The appreciation of the US dollar and other major currencies against rupee has increased the cost of imported raw material and intermediate goods. The government is considering further enhancement in the regulatory duty on large number of imported items including raw material which would abnormally add to the cost of production, wiping out the minimal comparative advantage of country’s exports might still have.

Working out a comprehensive industrial policy to facilitate manufacturing of finished goods, raw material and intermediate goods that are consumed in it and imports substitution has never been a priority by successive governments after the nationalization of private industrial enterprises. The developing countries that adopted the growth models of mixed economies equally focused on the indigenous production of raw material, technological up-gradation, products innovations and optimal energy mix to keep the electricity tariff low. That is why during the past 15 years exports from countries like Vietnam grew from $20 billion to $214 billion and Bangladesh from $billion to 41 billion and Pakistan lagged behind by increasing exports from $10 billion to 22 billion. The factors responsible for sluggish exports’ performance are sky-high tariffs of energy inputs, total reliance on the import of raw material and intermediate goods for the production of export products and above all technological stagnation. In the prevailing scenario the demand of cut in import duty of raw material by the trade bodies seems justified.