In a significant policy shift, Pakistan’s Tariff Policy Board (TPB), led by Commerce Minister Jam Kamal Khan, has approved the commercial import of used cars up to five years old, subject to a 40% additional duty. The decision, confirmed by senior Ministry of Commerce sources, has sparked strong opposition from the local auto industry, which warns of potential damage to domestic manufacturing and increased scrutiny from international financial institutions.
Key Decision and Next Steps
The TPB’s approval allows the import of used vehicles under PCT Code 8703, specifically targeting commercial-use cars. These imports will be subject to a 40% additional regulatory duty (ARD). The approved summary will be presented to the Economic Coordination Committee (ECC) for final approval later this week. Until June 30, 2026, imports will be restricted to vehicles no older than five years, after which the age restriction will be lifted entirely. All imported vehicles must comply with environmental and safety standards set by the Ministry of Industries and Production and other relevant authorities.
Industry Reaction
The local auto industry has openly opposed the move, arguing that liberalizing used car imports could severely harm domestic manufacturing. Industry representatives highlighted that the used car trade is already under scrutiny by the Financial Action Task Force (FATF) due to potential risks related to money laundering and terror financing. Manufacturers and suppliers emphasized that their policy recommendations—derived from international best practices—were overlooked. They warned that Pakistan’s auto sector, a critical engineering and manufacturing base, is vulnerable to policies that prioritize imports over local production.
Implications and Future Outlook
If the ECC approves the proposal, commercial importers will gain access to a market segment long under strict control. However, local manufacturers may face increased competition at a time when they are already struggling with declining sales and rising production costs. The policy debate is expected to intensify in the coming weeks as the government balances IMF conditions, consumer demand, and the need to protect the country’s industrial backbone.
Frequently Asked Questions (FAQs)
1. What has the government approved regarding used car imports?
The Tariff Policy Board has approved the import of commercial used cars up to five years old, subject to a 40% additional duty.
2. What are the conditions for importing these vehicles?
Imported vehicles must not be older than five years until June 2026, after which the age restriction will be removed. They must also meet environmental and safety standards set by relevant authorities.
3. Why is the local auto industry opposing this decision?
The industry fears that increased used car imports will harm domestic manufacturing, lead to job losses, and attract FATF scrutiny due to potential money laundering risks.
4. What is the next step for this policy?
The proposal will be presented to the Economic Coordination Committee (ECC) for final approval.
5. How will this decision affect consumers?
While consumers may have access to more affordable used car options, local manufacturers warn that the policy could undermine the long-term sustainability of the domestic auto industry.
