Over 500,000 MT steel being smuggled from Iran, Afghanistan annually

ISLAMABAD: As per the Pakistani Association of Large Steel Producers (PALSP), over 500,000 MT steel is being smuggled from Iran, Afghanistan annually which remains unchecked and is being done in an organized manner.

The PALSP has written an appeal letter to the Prime Minister, Muhammad Shehbaz Sharif, concerning the large-scale smuggling of steel from Iran and Afghanistan.

The letter sent to the PM on Monday states that this illegal activity, in combination with other factors, is destroying the local steel industry in Pakistan. The industry is already facing many challenges, including currency depreciation, high financial costs, and a significant increase in input costs. Additionally, the production activity has come to a halt due to the shortage of raw materials, and many mills are working at a small fraction of their capacity.

It is important to note here that steel is one of the major raw materials for many high value industries, ranging from automobiles to smartphones. The smuggling of steel not only makes the government take a hit on its revenue but also hinders Pakistan’s industrial growth.

The situation has been exacerbated by the rampant smuggling of steel from Iran and Afghanistan, which continues unchecked and is being done in an organized manner. This is resulting in significant damage to the local steel industry and causing substantial revenue losses to the nation’s exchequer. According to estimates, approximately 500,000 metric tons of steel are smuggled into Pakistan annually from these two countries, which is around 10% of the total steel produced in the country. This menace results in an annual revenue loss of around 25 billion rupees to the national exchequer. It could also lead to money laundering-related issues that could implicate Pakistan in FATF, as per the letter.

The smuggling of steel has caused the local steel industry to effectively disappear in Quetta and most other parts of Balochistan, with over 80% of the steel sold in Balochistan is coming from Iran through smuggling or through mis-declaration, under-invoicing, and other deviant tactics. PALSP considers this an organized crime, which is pushing Pakistan towards de-industrialization. Due to the lack of control, smuggled steel is not confined to Baluchistan, as it is reaching other parts of the country like Lahore, Karachi, and other large cities.

PALSP has attached pictorial evidence of large trucks/trailers of steel from Iran caught in Lahore in March 2023, and a truck full of brand new steel (rebars) being smuggled from Afghanistan through Chaman border in the first week of April 2023. Customs departments have already lodged cases/FIRs against them. PALSP has appealed to the concerned government departments to curb this unlawful activity by taking concrete measures. They have suggested in the past that the import of steel should be allowed only through sea routes, which would help in effectively countering the threat posed by smuggling.