The domestic ceramic tiles and glass industries have cautioned the government that massive reductions in import duties under the second phase of tariff rationalisation policy in the budget (2026-27) would result in total closure of local manufacturers.

It has come to the notice of domestic producers that regulatory duty (RD) would be reduced by 20% and additional customs duty (ACD) by 50% on the import of tiles under phase-II of the tariff rationalisation plan.

Industry representatives, while reacting to the budget proposals, warned that the decision could severely undermine the competitiveness of local manufacturers already operating under significant cost disadvantages.

On Saturday, Chairman of the National Assembly Standing Committee on Finance Naveed Qamar also raised the issue before the Finance Committee and sought clarification from the Ministry of Commerce and the National Tariff Commission (NTC) about the impact of tariff rationalisation on domestic industries. “Domestic industries have cautioned of total closure following huge reduction in RDs and ACDs at the import stage. How will the government tackle the situation of serious implications of phase-II of massive reduction in import duties on items being manufactured by domestic sectors?” Qamar asked.

In a communication to the finance ministry and commerce ministry, domestic manufacturers stated that they had earlier urged policymakers to maintain the existing tariff structure until domestic manufacturers were provided a genuine level playing field vis-à-vis regional competitors. They noted that despite repeated representations, the budget has moved in the opposite direction without addressing the fundamental issues affecting industrial competitiveness.

According to industry sources, Pakistan’s ceramic tile sector is currently operating at nearly 50% of its installed capacity due to prolonged economic slowdown, depressed construction activity, exceptionally high energy costs and expensive financing. Manufacturers contend that local production costs remain substantially higher than those of competing countries, particularly China and India, where industries benefit from lower energy prices, larger economies of scale and more supportive business environments. Industry stakeholders emphasised that the sector has never sought special treatment or protection. Rather, it has consistently advocated for the removal of structural disadvantages that make local production less competitive. They pointed out that high electricity tariffs, gas prices, financing costs, taxation and compliance expenses continue to erode the competitiveness of Pakistani manufacturers.

The industry warned that reducing RD and ACD before addressing these cost distortions would encourage a larger influx of heavily dumped imported finished tiles into the local market. Such imports, often produced at significantly lower costs, would further displace domestic production, suppress capacity utilisation, discourage fresh investment and threaten existing employment in the sector.

Representatives argued that sustainable competition can only emerge when competitors operate under broadly comparable conditions. They maintained that asking local manufacturers to compete with dumped imported products while bearing substantially higher costs amounts to creating an uneven playing field rather than promoting fair competition.

Industry leaders stressed that Pakistan’s long-term economic interests require strengthening domestic manufacturing rather than increasing dependence on imported finished products.

The industry has urged the government to immediately review the proposed reductions in RD and ACD applicable to imported finished tiles and to engage with stakeholders before implementing measures that could have far-reaching consequences for domestic manufacturing.

Stakeholders expressed hope that policymakers would recognise the strategic importance of the ceramic tile and glass sectors and adopt measures aimed at reducing the cost of doing business, rationalising energy prices, improving access to finance and ensuring a genuine level playing field for domestic manufacturers.

Industry representatives of the glass sector cautioned that unless structural cost disadvantages are addressed first, the proposed reductions in RD and ACD may accelerate deindustrialisation, weaken local manufacturing capacity and jeopardise thousands of jobs linked directly and indirectly to Pakistan’s ceramic tile industry.