Pakistan Plans to Reduce Vehicle Import Tariffs Under New Auto Policy
Pakistan is preparing a new five-year auto policy that will gradually lower tariffs on vehicle imports, as part of broader economic reforms agreed with the International Monetary Fund under its financial support program.
The policy aims to make the auto sector more competitive, simplify the tariff structure, and improve affordability for consumers while supporting local industry growth.
Gradual Reduction in Import Tariffs
Under the proposed plan, the average tariff on vehicle imports is expected to decrease steadily over the next few years:
- Current average tariff: 10.6%
- Expected in 2026-27 budget: around 9.5%
- Target by 2030: approximately 7.4%
The revised structure will introduce simplified tariff slabs of 0%, 5%, 10%, and 15%, with duties on completely built-up (CBU) vehicles capped at 15%.
Part of IMF Reform Commitments
These changes are part of Pakistan’s commitments under the IMF’s Extended Fund Facility, which encourages:
- Lower trade barriers
- A simplified tariff system
- Gradual removal of additional and regulatory duties
Officials have also confirmed that no new regulatory duties will be introduced under the new policy.
Focus on Local Industry and Lower Prices
The government aims to strike a balance between encouraging imports and supporting domestic manufacturing. Key goals include:
- Promoting local production and parts localization
- Improving competition in the auto sector
- Helping reduce vehicle prices over time
Haroon Akhtar Khan, adviser on industries, stated that the policy is in its final stages and will be presented for approval soon.
Regulatory Changes Also Underway
Alongside tariff reforms, the government is updating regulations to strengthen the sector. The proposed Motor Vehicle Development Act will empower the Engineering Development Board to enforce safety and environmental standards.
Additionally:
- The personal baggage scheme for vehicle imports has been discontinued
- Rules for gift and transfer-of-residence schemes have been tightened
These steps aim to ensure transparency and prevent misuse in vehicle imports.
