LAHORE: Pakistan’s domestic manufacturers and ultimately Pakistani consumers are paying the price for a flood of imported goods that arrive cheaply, with compromised standards and, in many cases, with invoices that mask the true value.
This not only results in revenue losses for the state, but also creates unfair competition for the local industry, and growing risks to safety and health. For instance, in late 2023 the Federal Board of Revenue (FBR) reported that the Directorate General of Customs Post Clearance Audit uncovered an under-invoicing case involving a Lahore-based importer that evaded duty to the tune of Rs186 million by declaring fake, lower invoices.
Around the same time, the Directorate of Customs Intelligence unearthed a scheme in which an importer declared imports of networking equipment from Holland at massively understated values, loss to the exchequer pegged at Rs437 million.
These numbers hint at a deeper rot. According to the FBR, “any importers, their clearing agents and the delinquent staff found involved in such practices shall be liable to punitive action under the law.” Meanwhile, customs enforcement has grown sharper.
But behind these enforcement numbers lies a broader industrial crisis. Local producers who invest in quality assurance, standards certification and regulatory compliance are consistently under-cut by importers who sidestep those costs. Take the steel sector: According to the industry, “the market is flooded with sub-standard steel materials … the documented and quality-compliant sector is at great disadvantage and discouraging further investments.”
Tyre manufacturers repeatedly point out that imported low-quality, often untested tyres are capturing local market share, undercutting domestic capacity and raising the risk of tyre failures on roads.
Another dimension is that many imported goods in Pakistan are either rejected elsewhere, made to lower specification at buyer request, or outright used/second-hand items cleared through dubious channels. The regulatory regime remains weak. The Pakistan Standards and Quality Control Authority (PSQCA), the institution meant to protect consumers and legitimate manufacturers, has been flagged for lacking leadership and effectiveness.
The impact on the domestic industry is clear. When import values are understated, duties and taxes shrink, reducing government revenue at a time when fiscal space is already constrained. Domestic manufacturers face a tilted field — one where their imported rivals avoid compliance costs and diversion of duties, enabling cheaper pricing. From sub-standard steel in construction, to unsafe tyres, to medicines and food items that fail quality checks, the cost is borne by the consumer and the state in the form of accidents, failures, and rework. When standard-compliant local firms find themselves unable to compete, they hesitate to invest, scale or hire — undermining growth, jobs and future capability.
One practical example is edible-oil imports. In November 2023 the Karachi Customs Intelligence unit found that an importer declared vegetable-oil and its products from Indonesia on fake invoices of Rs 56 million when actual price was more than Rs 82 million — evading Rs 275 million in duty and tax. This enabled the importer to offer imported oil at domestic retail prices while pocketing the margin — undercutting Pakistani processors who have to meet standards, pay duties and invest in refining infrastructure.
Pakistan needs a credible five-pillared reform in this regard. First is to equip PSQCA and regional labs with resources, expedite inspections of high-risk categories (tyres, steel, medicines, imported vehicles).
The step taken by the FBR on customs intelligence and post-clearance audit are promising, but need to scale dramatically. Linking export/export documents, scanning for invoice mis-matching, targeting shell-company importers and showing visible prosecution will raise deterrence. There must be tight regulation of used goods and refurbished items.
Transparent valuation mechanisms: The move by customs to transition from valuation rulings (VRs) to publication valuation rulings (PVRs) — linking to international price databases — is a step in the right direction.
Pakistan cannot afford to be the dumping ground of rejected, sub-standard goods sold under the radar. The drift undermines manufacturing, erodes revenue, jeopardises consumer safety and damages aspirations for a competitive, export-oriented economy.
