Are import-curtailing strategies encouraging smuggling?

The Pakistan Tehreek-e-Insaf (PTI) government's policies aimed at curtailing imports have started yielding desired results. The trade deficit has contracted considerably but whether the current path is the right one or will it give rise to smuggling remains to be seen.

According to data compiled by the Pakistan Bureau of Statistics, imports into the country decreased 16 percent to $27.2 billion in first seven months (Jul-Jan) of the current fiscal year 2019-20 compared to $32.4 billion in the same period of the previous fiscal year.

In its efforts to contain the import bill, the government hiked customs duty and regulatory duty on imported products to discourage imports and encourage their substitution with locally produced goods.

The efforts bore fruit as reflected in the trade figures, which displayed a 28 percent contraction in the trade deficit in the first seven months of the current fiscal year. The deficit shrank from $19.2 billion in Jul-Jan FY19 to $13.8 billion in Jul-Jan FY20.

However, prices of imported products have nearly doubled in the wake of import substitution policies and...