Government Decides to Abolish Duties on Imported Vehicles

Draft Auto Policy Prepared; Local Industry Sounds Alarm
Islamabad
The federal government has taken a bold and potentially transformative step in Pakistan’s automotive sector, deciding to eliminate customs duties on imported vehicles as part of a sweeping new auto policy whose draft has already been prepared and is awaiting finalisation.
According to government sources, the primary objectives behind this move are to introduce greater competition into Pakistan’s long-protected car market, bring down vehicle prices for consumers, and offer buyers access to a wider range of internationally manufactured automobiles at more affordable rates. Under the current structure, heavy import duties have kept foreign vehicles largely out of reach for most Pakistani consumers, effectively shielding domestic manufacturers from international competition.
The decision, however, has sent a wave of anxiety through Pakistan’s local automobile industry. Manufacturers operating in the country have warned that eliminating import duties would place them at a severe competitive disadvantage against foreign producers who benefit from economies of scale, advanced technology, and lower production costs. Industry representatives have cautioned that the move could threaten thousands of jobs across the manufacturing and ancillary supply chain sectors.
Economists are divided on the merits of the proposal. Proponents argue that opening the market will ultimately benefit the Pakistani consumer through lower prices, greater product variety, and improved quality standards — outcomes that a protected market has historically failed to deliver. Critics, however, warn that a surge in vehicle imports could place enormous pressure on Pakistan’s already strained foreign exchange reserves and widen the country’s trade deficit at a time when the economy can ill afford it.
The draft policy is expected to be reviewed by relevant stakeholders before being presented for formal approval. Industry bodies are likely to lobby strongly for safeguards or a phased approach to any duty reductions.