ISLAMABAD — The government has cleared a major policy shift by allowing commercial imports of used cars up to five years old, but only under strict conditions and at a steep 40% duty.
The Tariff Policy Board (TPB), chaired by Commerce Minister Jam Kamal Khan, approved the plan after weeks of back-and-forth among key ministries. The proposal will now be sent to the Economic Coordination Committee (ECC) for final sign-off.
What the New Policy Allows
- Imports apply to vehicles under PCT code 8703.
- Until June 30, 2026, only cars not older than five years will be permitted; the age cap will then be removed.
- A 40% additional regulatory duty will be slapped on all such imports.
- Vehicles must meet environmental and safety benchmarks, which will be enforced by the Ministry of Industries and other regulators.
The move expands consumer choice in an auto market often criticized for limited variety and inflated prices.
Why the Decision Matters
For the government, this step aligns with IMF-backed reforms aimed at loosening trade barriers and making the market more competitive. For consumers, it could mean more affordable alternatives to locally assembled vehicles.
But for Pakistan’s already struggling auto industry, the policy is viewed as a direct threat.
Pushback From Local Automakers
Industry leaders warn that easing restrictions on used car imports could erode one of the country’s largest manufacturing bases. They argue that local assembly plants, which employ thousands and feed into allied industries, will lose ground if cheaper used imports flood the market.
There’s also an international dimension: the Financial Action Task Force (FATF) has previously flagged the global used-car trade for its potential links to money laundering and terror financing. Manufacturers argue that the government ignored these risks, along with their policy recommendations drawn from global practices.
What Happens Next
The ECC will decide whether the TPB’s plan becomes official policy. If approved, commercial importers—long restricted from this space—will gain entry into a lucrative market segment.
That would leave domestic carmakers facing new competition at a time when they’re already grappling with falling sales, higher input costs, and a weakening rupee.
The government is now walking a tightrope: trying to balance IMF conditions and consumer demand without dismantling the country’s fragile industrial base.
