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In the upcoming 2025-26 budget, cars and auto parts are likely to become cheaper. The Pakistani automotive industry is already on track finally as we see new brands and cars being introduced every other day; this initiative is likely to attract more potential players.
The initiative came in as the IMF urged Pakistan to lower import-related taxes, particularly in the automobile sector, to encourage greater competition. The government is reportedly considering reducing the current 2% additional customs duty on auto parts to zero.
A gradual decrease in existing customs duty slabs on parts is also expected, which currently range from 4% to 7%. Proposals are on the table to reduce the existing duties on vehicles by 20%, which currently range significantly from 15% to 90%.
These reductions are expected to be implemented under the new National Tariff Policy to bring Pakistan’s tariffs in line with global standards. The policy is slated to take effect right after the budget from July 2025.
Ultimately, the government aims to reduce the weighted average tariff on automobiles to just 5.6% by 2030, a significant decrease from current levels. Regulatory duties on vehicles are also expected to see substantial reductions, ranging from 55% to 90% in the first year of implementation.
The proposed relief in duties is primarily focused on new imported vehicles, with potential reductions ranging from 5% to 30% for vehicles up to 1801cc. Used imported vehicles might not see the same level of relief, as the government aims to discourage the grey market and protect local manufacturers.
