Pakistan plans phased removal of duties on used car imports from 2026

The federal government is considering a major shift in its automobile policy that would gradually eliminate duties on used car imports, with the new framework expected to take effect from July 1, 2026.

According to official sources, the draft of the new auto policy is currently being prepared and is in early-stage consultation with the International Monetary Fund (IMF). The proposed plan aims to reduce additional customs duties and regulatory duties on imported vehicles in a phased manner over the next four to five years.

Under the proposal, customs duty rates are expected to be significantly reduced by 2030, marking a long-term liberalization of Pakistan’s vehicle import regime. The policy also suggests that vehicles older than five years may eventually be allowed for import, subject to strict safety and environmental compliance standards along with required certifications.

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Officials said the government intends to finalize the draft within the current month, after which further discussions with the IMF will continue. The policy is expected to be presented to the federal cabinet for approval next month.

The initiative is part of broader reforms being undertaken by the Ministry of Industries and Production aimed at improving transparency, reducing tariffs, and increasing competition in the auto sector. From fiscal year 2027 onward, additional duties may be reduced by 10 percent annually, and imports of vehicles up to seven years old could also be permitted after that period.

In parallel, the government plans to introduce stricter safety regulations for locally manufactured vehicles under the proposed Motor Vehicle Development Act, which will be tabled in parliament for approval.

Meanwhile, IMF Managing Director Kristalina Georgieva has acknowledged Pakistan’s ongoing reform efforts, noting progress in macroeconomic stability and improved investor confidence during a meeting with Finance Minister Muhammad Aurangzeb at the IMF–World Bank Spring Meetings in Washington, DC.