Tea smuggling increases by 50 percent

* Smuggled tea mostly finds its way into Pakistan under the Afghan Transit Trade facility

By Razi Syed

KARACHI: Tea smuggling into Pakistan increased by 50 percent in the first nine months of the current fiscal year, mostly under the Afghan Transit Trade (ATT).

Khawaja Farooq, a former chairman of the Pakistan Tea Association (PTA), said on Saturday around 30 million kg tea is coming through illegal channels into the country and illegal imports stood around 28 million kgs of tea during July-March 2005-06, against 18 million kg in same period last year.

He said in 1991 Pakistan’s total consumption of imported tea remained around 100 million kg and about three percent increase in tea consumption takes place every year.

Now we are importing 145 million kg tea from different countries of which Kenya tea shares around 55 percent of the total imports while Kenya is also the source of most of the smuggled tea, he added.

Mr Farooq said the legal imports dropped by over 18 percent to around 80 million kg during the nine months of this fiscal, compared with 106 million kg in the same period least year. He said the country’s annual tea demand comes to around 170 million kg

He said smuggled tea was expected to form over 30 percent of the total tea available in the country this year, rising from 20 percent in 2005 and 15 percent in 2004.

He attributed higher taxes and duties on the import of tea through official routes and ATT to the smuggling growth.

He said Pakistan charges 10 percent import duty, along with 15 percent sales tax, an additional 10 percent value-added tax and another 2 percent income tax on imported tea.

He said: “But smugglers do not have the expertise to market the tea, blending, distribution system and mixing tea for consumption, that is why they have not yet captured the major market share.”

He said more than 90 percent of smuggled tea is consumed in the NWFP and Balochistan while a little quantity is used in interior Sindh.

He said according to official sources, the smuggled tea, mostly from Africa, usually enters Pakistan through Afghanistan under the ATT facility.

He said the landed cost of smuggled tea comes around 130 rupees per kg, while legally imported tea, after duty and taxes, cost the importers around 160 rupees per kg.

He said it is high time the government withdrew import duty and reduced sales tax to 10 percent from 15 percent in the forthcoming budget. He also asked the government to put the black tea on the negative list under the ATT in order to curb smuggling.

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