ISLAMABAD – Pakistan’s auto sector remains in dire straits, with prices of all vehicles touching all-time highs, but now car prices are likely to be on Way in New Fiscal Year as tariffs on the Auto Sector are reduced.
The development comes as the federal government is likely to major trade liberalization plan under the guidance of International Monetary Fund (IMF). As part of the deal, the average import tariff will be reduced by one-third over the next five years, a change that is set to make vehicles more affordable for Pakistani consumers, as per reports.
The country’s automobile sector saw high import tariffs, which covered local manufacturers from external competition. The new policy will bring average tariff for the auto sector down to just 5.6pc by 2030, significantly reducing cost of cars for consumers.
As per reports, the move to lower tariffs on automobiles is expected to create a more competitive market, benefiting consumers with lower prices and wider choices. The policy will also help local car manufacturers become more competitive on the global stage, as they will no longer have the advantage of tariff protection.
This reduction in tariffs is part of a broader strategy to open up Pakistan’s economy to greater external competition, which is being carried out in consultation with the IMF.
The expected tariff reductions are set to begin in July 2025, with new national tariff policy scheduled to be approved by the federal cabinet by June 2025. In the coming years, the government plans to revamp the auto industry’s development and export policies, beginning in 2026, to ensure the sector’s continued growth despite the reduction in protective tariffs.
With expected reforms, auto buyers could expect to see a significant drop in prices, making vehicles more accessible to a larger portion of the population.
Pakistan’s auto sector traditionally relied on high tariffs for protection, the new agreement with the IMF marks a shift toward greater market competition, similar to trends in other countries. The government’s broader economic plan includes an expected increase in exports and a growth forecast of 4.6% annually, driven in part by these trade liberalization efforts.
By 2030, Pakistan aims to see a thriving, competitive auto industry that will not only reduce the cost of cars but also make the country a more attractive market for international automobile manufacturers.
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