ISLAMABAD: Pakistan’s Commerce Ministry said on Wednesday it had imposed a 40 percent regulatory duty on the commercial import of used cars and planned reforms to curb misuse of vehicle import schemes meant for overseas Pakistanis.

Pakistan’s used car market has expanded steadily over the past few years, largely through the baggage, gift and transfer-of-residence schemes governed by the Import Policy Order under the Federal Board of Revenue (FBR). These schemes were designed to allow overseas Pakistanis to bring home vehicles for personal use, but officials say many importers have exploited loopholes to import cars commercially, often using informal payment channels. 

The surge in such imports has drawn concern from the government and local manufacturers who argue that unrestricted inflows distort competition, widen the trade deficit and undermine investment in domestic assembly plants.

“By enforcing quality inspections and defining clear import rules, we aim to promote compliance and transparency while supporting Pakistan’s industrial growth,” Commerce Minister Jam Kamal Khan said in a statement.

The ministry said pre-shipment and post-shipment inspection systems would be implemented through the Engineering Development Board (EDB) to ensure safety and quality compliance. It is also drafting amendments to the overseas Pakistani import schemes to eliminate commercial misuse while still facilitating genuine expatriates.

Khan said the new regulatory duty would be gradually reduced each year to balance incentives for the local industry and promote fair competition.

The ministry said it was seeking proposals from industry bodies — including the Pakistan Automotive Manufacturers Association (PAMA) and the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) — for the upcoming Automobile Policy due in November.

“Our goal is not only to control misuse in imports but also to strengthen local manufacturing and build Pakistan’s capacity for global competitiveness,” Khan said.

The ministry said it would continue consultations with industry stakeholders to ensure policy consistency and sustainable growth in the automotive sector.