ISLAMABAD (Kashmir English): An interesting transformation seems to be taking place in Pakistan’s auto market, with the government looking to end decades-old import restrictions, increasing customer options, and lowering costs.
The domestic auto market has always operated under a highly protected tariff regime intended to shield domestic companies from foreign competitors.
Such an arrangement led to high import taxes that reached up to 150% of the value paid by customers importing JDM cars, hybrid vehicles, and feature-packed imports. Consumers have thus been left to choose between locally assembled vehicles, which are notorious for offering limited features in comparison to their global counterparts.
According to the information provided in a Dawn report, this protectionist structure will soon witness structural changes.
In particular, Prime Minister Shehbaz Sharif has reportedly agreed on the strategy to implement the second phase of the government’s Tariff Reform Policy of five years, running from 2025 to 2030.
It is envisaged that this scheme will be incorporated in the upcoming Budget 2026-27 and will ensure the provision of Rs200 billion in relief to industries by lowering duties on imports in various industries, with the automotive sector being one of the priority segments targeted under the scheme.
Breakdown of Proposed Import Duty on Cars
| Duty Component | Current Rate | Proposed Rate (FY27 Budget) | Change |
|---|---|---|---|
| Customs Duty (CD) | 100% | 50% | 50% reduction |
| Regulatory Duty (RD) | 50% | 20% | 30% reduction |
| Total Combined Tariff | 150% | 70% | 80% reduction |
Under this reform plan, there would be considerable tax relief for CBU vehicles in the case of successful implementation.
Both Customs Duty (CD) and Regulatory Duty (RD) constitute the overall import duty levied on vehicles.
Currently, the import duty for CBU vehicles stands at 150%, but in the case of successful implementation of Phase 2, the overall import duty can come down to 70%.
Such changes, if implemented, will constitute one of the most significant shifts in Pakistan’s auto import policies in the recent past, having the potential to transform market dynamics as well as offer a larger variety of vehicles to consumers.
