Karachi: In a significant move aimed at rationalizing the country's tariff structure, the government of Pakistan has announced a reduction in import duties under the second phase of the National Tariff Policy (NTP) for 2025-30. The changes, which are set to take effect from July 1, 2026, are expected to impact several key sectors, including automotive, tyre, steel, and chemicals, potentially altering the landscape for local and international businesses.
According to JS Global, the government has issued SRO 1064(I)/2026, which supersedes the previous SRO 1152(I)/2025. The new regulations cap the maximum regulatory duty (RD) at 20%, down from the previous 50%, with steeper reductions for products that previously attracted higher duties. Significant reductions have also been made to customs duty (CD) and additional customs duty (ACD) across various sectors.
In the automotive sector, import duties on completely knocked down (CKD) kits, auto parts, and completely built units (CBUs) have been reduced, making imports more affordable. However, local assemblers, who already benefit from concessionary rates under SRO 656, may not see significant advantages from these changes.
The tyre industry is expected to face increased competition as the RD on new tyres has been reduced by 4%, potentially affecting the profitability of local manufacturers. Similarly, the steel sector will see reduced duties on long steel and iron products, with a positive impact anticipated for flat steel manufacturers due to reduced costs on raw materials.
The chemical sector will experience a minor reduction in RD for soda ash, which could impact companies like Lucky Core Industries. Additionally, duties on hydrogen peroxide and polyesters have been reduced, potentially benefiting related industries.
Other miscellaneous sectors, such as razors and round cans, will also see reductions in RD, which may increase import competition and affect local manufacturers like TREET and PABC. Furthermore, a decrease in CD on unmanufactured tobacco is expected to benefit companies relying on imported tobacco.
The government has announced plans to phase out regulatory duties completely by 2030, aligning with the broader objectives of the National Tariff Policy. However, the revised auto policy, which is expected to introduce a new incentive structure for the automotive sector, has yet to be released.