Government Ends Used Car Baggage Scheme

The government has implemented a significant policy change by banning the import of used cars under the baggage scheme. This decision comes as part of broader efforts to address ongoing economic challenges, despite previous claims of reform. The ban reflects the government’s attempt to tighten import controls and manage fiscal pressures effectively.

The Economic Coordination Committee on Tuesday abolished the baggage scheme for used car imports, ending a long-standing facility for overseas Pakistanis. The ECC tightened the remaining Gift and Transfer of Residence schemes by increasing the required stay abroad from 700 to 850 days, extending the permissible import period to three years, and keeping imported vehicles non-transferable for one year. Cars must now also be imported only from the sender’s country of residence.

A senior official told the meeting,

“These measures aim to regulate misuse of schemes while ensuring safety and environmental compliance.”

The move, however, restricts competition in Pakistan’s automobile market, contradicting earlier expectations under IMF-supported liberalisation.

The ECC also raised profit margins for oil marketing companies and petroleum dealers, resulting in a Rs2.56 per litre increase in petrol and diesel prices. Half of the margin increase will be released immediately, with the rest dependent on sector digitisation progress.