ISLAMABAD – The Tariff Policy Board (TPB), led by Minister for Commerce Jam Kamal Khan, has formally cleared the commercial import of five-year-old used vehicles, subject to an additional 40 percent duty.
The decision, confirmed by senior Commerce Ministry sources, has drawn strong objections from Pakistan’s auto sector, which warns that the policy could undermine local manufacturing and fall under scrutiny from international financial watchdogs.
Key Decision and Next Steps
- The TPB’s approval allows the commercial import of five-year-old used cars under PCT 8703.
- A 40 percent additional duty (ARD) will be imposed on these vehicles.
- The approved summary will be presented to the Economic Coordination Committee (ECC) later this week for final authorization.
- Until June 30, 2026, imports will be limited to vehicles no older than five years; the age restriction will be lifted thereafter.
- Compliance with environmental and safety standards, as specified by the Ministry of Industries and Production or relevant departments, will be mandatory.
Terms of Import
According to the TPB’s finalized proposal, imports will apply to vehicles falling under PCT code 8703. Until June 30, 2026, only cars that are not older than five years will be allowed; after this date, the age restriction will be removed entirely.
The board has also made compliance with environmental and safety regulations mandatory, with oversight to be provided by the Ministry of Industries and Production, as well as other relevant authorities.
Deliberations and Approval
The board, which includes representatives from the Ministries of Commerce, Industries and Production, Finance Division, and the Federal Board of Revenue, debated the proposal across two consecutive meetings.
While several ministries acknowledged the risks raised by industry stakeholders, the decision ultimately moved forward, reflecting the government’s alignment with IMF benchmarks and its intent to expand consumer choice in the automobile market.
Industry Pushback
The country’s auto industry has been vocal in opposing the plan, warning that the liberalization of used car imports could seriously undermine local manufacturing.
Industry representatives have pointed out that the used car trade is already on the Financial Action Task Force’s (FATF) radar, due to its potential links with money laundering and terror financing risks.
In communications with the government, manufacturers and suppliers stressed that their policy recommendations—drawn from international practices—were not taken into account.
They argued that Pakistan’s auto sector, which they described as one of the country’s most significant engineering and manufacturing bases, is at risk of being weakened by decisions that prioritize imports over domestic production.
The Road Ahead
With the ECC (Economic Coordination Committee) now set to consider the summary, the final contours of the policy will soon become clear. If endorsed, commercial importers will gain access to a market segment that has long been tightly regulated.
At the same time, domestic manufacturers may face increased competition, a challenge that comes at a time when they are already struggling with declining sales and rising production costs.
The coming weeks are expected to intensify the policy debate between meeting IMF conditions, supporting consumer demand, and safeguarding the country’s industrial backbone.
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