ISLAMABAD: The federal government of Pakistan is considering a major shift in its automobile sector by planning to gradually eliminate duties on used car imports under the upcoming auto policy 2026. The new policy, expected to take effect from July 1, 2026, aims to make the car import process more transparent, competitive, and consumer-friendly.
According to sources, the draft policy is currently being prepared and is under initial consultation with the International Monetary Fund. The proposed framework includes a phased reduction of additional customs duties and regulatory duties on imported vehicles over the next four to five years. By 2030, customs duty rates are expected to be significantly reduced, potentially making imported cars more affordable in Pakistan.
The policy also proposes easing restrictions on vehicle age limits. Initially, cars older than five years may be allowed for import, provided they meet strict safety and environmental standards and obtain proper certification. After fiscal year 2027, the government may permit the import of vehicles up to seven years old, further expanding options for buyers in the local market.
Officials stated that the Ministry of Industries and Production is leading this initiative to reform the auto sector by lowering tariffs and improving regulatory transparency. The government plans to finalize the draft within the current month, followed by further consultations with the IMF before presenting it to the federal cabinet for approval.
In addition to easing import duties, the government is also focusing on improving the safety standards of locally manufactured vehicles. A proposed Motor Vehicle Development Act will be introduced in parliament to enforce stricter safety and quality regulations in the domestic auto industry.
Meanwhile, IMF Managing Director Kristalina Georgieva has acknowledged Pakistan’s progress in implementing economic reforms. During her meeting with Finance Minister Muhammad Aurangzeb at the IMF–World Bank Spring Meetings in Washington DC, she appreciated the country’s efforts in maintaining macroeconomic stability and boosting investor confidence.
The new auto policy is expected to bring significant changes to Pakistan’s automobile market, potentially lowering car prices, increasing competition, and providing consumers with more choices in the coming years.
