Karachi, January 31, 2025 – In a move aimed at protecting the domestic steel industry, the Federal Board of Revenue (FBR) has announced the extension of regulatory duties on steel product imports. The FBR issued SRO 78(I)/2025 on January 30, 2025, amending SRO 928(I)/2025, which was originally released on June 30, 2024. This extension seeks to continue safeguarding local steel manufacturers from external competition and maintain stability in the sector.
The decision comes after extensive discussions and recommendations from the Tariff Policy Board (TPB), which reviewed the current status of the steel industry. As per the new regulation, a 10% regulatory duty on flat steel products, initially introduced under the Finance Act of 2024, will remain in effect until March 31, 2025. However, from April 1, 2025, this duty will be reduced to 5%. The extension, originally set to expire on December 31, 2024, aligns with the guidelines outlined in the National Tariff Policy 2019-2024, which mandates that all tariff-related changes undergo review by the Tariff Policy Centre before final approval from the Cabinet or Parliament.
The TPB’s decision follows industry calls for continued regulatory support to shield local manufacturers from increased competition due to foreign imports. The TPB held its 61st meeting on December 26, 2024, where it discussed the state of the steel market and recommended extending regulatory duties on 36 tariff lines of flat steel products. At the same time, the Board outlined that from April 1, 2025, the duties would revert to their original levels of 0% and 5%, depending on the category of product.
The Ministry of Commerce, in consultation with the Economic Coordination Committee (ECC), highlighted the federal government’s authority under Sub-Section 3 of Section 18 of the Customs Act, 1969, to impose regulatory duties. With the TPB’s endorsement, the Ministry proposed extending the regulatory duties on specific iron and steel flat products. This measure is seen as a necessary action to maintain the health of the local steel industry, which has faced significant pressure from cheaper imported steel.
International Steel Limited, a key player in Pakistan’s steel sector, has further requested that the regulatory duties be extended until June 30, 2025, and that a 10% duty be imposed on Galvalume steel coils and sheets. The company argues that this would prevent circumvention of anti-dumping duties, which have already been implemented to protect the local market from unfair foreign competition. However, the TPB had previously recommended in May 2024 that any tariff changes be limited by a sunset clause, with the duties set to expire by December 31, 2024.
In its discussions, the TPB also examined the broader implications of regulatory duties on the steel industry. The Joint Secretary of the Tariff Policy noted that the current tariff structures include customs duties ranging from 11% to 20%, additional duties between 2% and 6%, regulatory duties of 5% to 10%, and anti-dumping duties ranging from 5.36% to 40.47%. While imports of flat steel products saw a modest increase of 4% in value from July to November 2024, imports of Galvalume steel coils and sheets declined by 13% in value and 8% in quantity, suggesting that the anticipated surge in imports may not have materialized.
The Joint Secretary also cautioned that extending or increasing regulatory duties could negatively impact downstream industries that rely on steel imports for their manufacturing processes. Furthermore, he emphasized Pakistan’s commitment to reducing trade-weighted average tariffs as part of its obligations under the International Monetary Fund (IMF) program. As such, the FBR continues to monitor the effects of these policies and aims to strike a careful balance between supporting local steel producers and meeting international trade commitments.
The ongoing assessment by the FBR will be crucial in determining how to navigate the complex dynamics between protecting local industries and ensuring compliance with global trade agreements. The extension of regulatory duties on steel imports underscores Pakistan’s efforts to foster a resilient domestic manufacturing sector while considering the broader economic implications.