Islamabad, Mar 23, 2025: Pakistan and the International Monetary Fund (IMF) have reached a landmark agreement to reduce the country’s weighted average tariff to 6% over the next five years.
This decision will significantly lower import costs and enhance foreign competition, making Pakistan’s tariff structure the most competitive in South Asia.
Currently set at 10.6%, the tariffs will gradually decrease, with the changes taking effect from July 2025.
Impact on the Automobile Sector
One of the most notable effects of this tariff reduction will be seen in the auto industry.
Lower import duties are expected to bring down car prices, benefiting consumers. The government has introduced two key policies to facilitate these changes:
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National Tariff Policy – Aims to bring the overall tariff to 7.4% by 2030.
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Auto Industry Development and Export Policy (AIDEP) – Specifically targets further reductions in the auto sector.
While the general weighted tariff will be set at 7.4% instead of the earlier agreed 7.1%, the auto industry will see even deeper cuts, making vehicles more Car Prices affordable.
Major Customs and Duty Reforms
In addition to tariff reductions, several other customs reforms will be introduced:
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Abolition of Additional Customs Duties – All additional duties on imports will be removed.
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Regulatory Duties Slashed by 80% – Drastic cuts in regulatory duties will ease the import process.
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Withdrawal of Concessions – Certain benefits under the Customs Act’s Fifth Schedule will be discontinued.
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Removal of Extra Charges – A 7% additional duty on select goods and a 2% charge on zero-tariff items will be eliminated.
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Timeline for Implementation
Although the IMF initially pushed for a 5% tariff rate, the Pakistani government has settled on a 6% target.
The policy is expected to gain federal cabinet approval by June, ensuring its inclusion in the 2025-26 budget.
Long-Term Changes in Auto Tariffs
By 2030, all additional customs and regulatory duties on vehicles will be removed, capping import tariffs at a maximum of 20%.
In the first year alone, regulatory duties on automobiles will be slashed by 55-90%, with further reductions planned annually.
A new 6% customs duty slab will also be introduced, ensuring a structured decrease across multiple categories.
With these reforms, Pakistan is set to become a more investor-friendly economy, promoting trade, competition, and affordability in key industries.
