The Businessmen Panel of the Federation of Pakistan Chambers of Commerce and Industry has strongly criticised the Federal Board of Revenue’s decision to allow tax-free Chinese imports through the Sost Dry Port for Gilgit-Baltistan, warning that the move could seriously undermine Pakistan’s already struggling industrial base. The Businessmen Panel described tax-free Chinese imports as a high-risk policy choice at a time when domestic manufacturers are under intense economic pressure.
Former FPCCI president and Businessmen Panel chairman Mian Anjum Nisar clarified that SRO 2488(I)/2025 does not grant unconditional exemption, as tax-free Chinese imports are technically restricted by quotas, online clearance systems, and certification requirements limiting consumption to Gilgit-Baltistan. However, he cautioned that regulatory safeguards on paper rarely ensure effective enforcement on the ground, especially in geographically challenging regions.
The Businessmen Panel stressed that tax-free Chinese imports could distort markets by placing compliant local manufacturers at a competitive disadvantage. Pakistan’s industrial sector is already facing high energy tariffs, elevated raw material costs, heavy taxation, weak consumer demand, and limited access to affordable financing. In such conditions, even limited tax relief for imported finished or intermediate goods can severely disrupt domestic supply chains.
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Tax-Free Chinese Imports Raise Alarm for Local Industry and Revenue
Drawing on past experience, Mian Anjum Nisar pointed out that similar regional concession schemes in former FATA and PATA areas were frequently abused. Despite formal conditions, tax-free Chinese imports and other exempted goods eventually leaked into settled districts, resulting in widespread smuggling, revenue losses, and long-term damage to documented businesses. The Businessmen Panel warned that Gilgit-Baltistan faces similar risks due to limited enforcement capacity and difficult terrain.
The Businessmen Panel also highlighted that Pakistan currently has surplus production capacity in sectors such as steel, cement, and construction materials. From this perspective, tax-free Chinese imports are not driven by supply shortages but risk displacing locally manufactured products that could otherwise meet Gilgit-Baltistan’s infrastructure needs through legal and documented channels.
Concerns were also raised about under-invoicing and misdeclaration through the Sost Dry Port route. According to the Businessmen Panel, tax-free Chinese imports significantly increase incentives for such practices, creating parallel supply chains that are extremely difficult to dismantle once established. Even if exemptions are withdrawn later, the market damage often becomes irreversible.
While acknowledging that the SRO allows Customs authorities to revoke benefits in cases of misuse, the Businessmen Panel emphasised that post-facto enforcement cannot fully repair the harm caused by leakage of tax-free Chinese imports into mainland markets. The chairman urged the federal government to reassess the implementation framework of SRO 2488(I)/2025 in consultation with industry stakeholders.
The Businessmen Panel called for stricter safeguards, suggesting that any conditional relief should be limited to essential raw materials rather than finished goods that directly compete with local producers. Without tighter controls, the panel warned, tax-free Chinese imports could weaken Pakistan’s formal economy, reduce employment, and further erode investor confidence at a critical time for industrial recovery.
