Govt Imposes 40% Extra Duty on Used Cars to Protect Local Auto Industry

The government of Pakistan has decided to strictly tighten rules for importing used cars into Pakistan under the personal baggage, gift, and Transfer of Residence schemes. 

This decision was made in an inter-ministerial meeting chaired by Commerce Minister Jam Kamal Khan. Mr Haroon Akhtar Khan, Special Assistant to the Prime Minister on Industries and Production, along with representatives from PAMA (Pakistan Automotive Manufacturers Association) and PAAPAM (Pakistan Association of Automotive Parts & Accessories Manufacturers), also attended the meeting.

Earlier, the Economic Coordination Committee (ECC), headed by Finance Minister Muhammad Aurangzeb, had reviewed proposals from the Commerce Division regarding amendments to the import policy for used vehicles. The committee suggested more consultation before implementing the final changes. 

Major Changes Being Considered

• From now on, the import schemes will be restricted to genuine overseas Pakistanis only. The vehicle must be registered in the name of the expatriate for at least 6 months before they move abroad or leave their country of residence.
• The core objective is to prevent local car dealers from importing vehicles using fake documents. 

Was This Change Important?

Yes, this change was important, as officials revealed that some commercial traders were misusing this perk by buying passports of overseas Pakistanis for just Rs 200,000 to bring used cars into the country. 

Some illegal channels, including hundi and hawala, were used to pay for these cars, which were later sold to local buyers using undeclared money. 

The Ministry of Industries raised concerns as it was not a positive indicator for local car manufacturers. 

PAAPAM also wanted tougher checks because too many used cars are being imported. This leads to a decrease in demand for local car parts, which hurts small manufacturers and their workers.

What to Expect Next?

Once they receive final feedback from all the stakeholders, a revised summary will be presented to the ECC for approval. 

Key Takeaway

By strictly implementing these rules and imposing a 40% extra duty on used cars, the government aims to support Pakistan's local car industry, prevent illegal money transfers, and ensure that genuine Overseas Pakistanis can bring their vehicles home fairly.