ISLAMABAD: The federal government has introduced sweeping amendments to thevehicle import policy, completely eliminating the personal baggage schemethat previously allowed overseas Pakistanis to bring vehicles into thecountry with significant duty concessions. The decision, aimed at curbingcommercial exploitation and preserving foreign exchange reserves, restrictsvehicle imports exclusively to the Transfer of Residence and Gift schemes,marking one of the most substantial policy shifts in recent years.
The Ministry of Commerce issued a formal notification amending the ImportPolicy Order 2022, explicitly withdrawing the personal baggage route whichhad been widely utilized by expatriates returning temporarily or importingvehicles for resale purposes. Officials familiar with the matter explainedthat the scheme had increasingly become a channel for commercial importsdisguised as personal effects, leading to substantial revenue losses forthe national exchequer and distorting the domestic automotive market.
Under the revised framework, overseas Pakistanis intending to importvehicles must now qualify strictly under the Transfer of Residence scheme,which requires proof of continuous stay abroad for a minimum period, orthrough the Gift scheme limited to close family members. These changes areexpected to reduce the annual volume of concessionary vehicle importssignificantly, with estimates from trade circles suggesting a potentialdecline of 60 to 70 percent compared to previous years when personalbaggage imports constituted a major share of the used car market.
A critical new restriction prohibits the transfer or sale of any importedvehicle for at least one full year after customs clearance. The measure isspecifically designed to prevent immediate resale of concessionaryvehicles, a practice that had undermined the intended welfare objective ofthe schemes and allowed profiteering at the expense of local manufacturersand revenue authorities. Violators face penalties including confiscationand additional duties.
In a concurrent relaxation intended to provide genuine relief to eligibleapplicants, the government has extended the permissible timeframe forimporting vehicles under the Transfer of Residence scheme from the previouslimit of 700 days to 850 days. The additional 150 days offer greaterflexibility to overseas Pakistanis planning permanent return, accommodatingdelays caused by logistical issues, family circumstances or propertydisposal abroad, sources in the Commerce Division confirmed.
Another important dimension of the policy revision is the enforcement ofstricter minimum safety and environmental standards for used vehicles. Allimported used cars must now comply with updated emission norms and safetyrequirements aligned with international benchmarks, addressing longstandingconcerns about the influx of older, high-pollution vehicles that contributeto deteriorating air quality in major urban centers including Karachi andLahore.
The policy adjustments arrive against the backdrop of persistent pressureon Pakistan’s foreign exchange reserves and recurring balance of paymentschallenges. Data from the State Bank of Pakistan indicate that theautomotive sector has remained among the largest consumers of foreigncurrency through imports, with vehicle-related outflows averaging severalhundred million dollars annually despite repeated tightening measures overthe past five years.
Industry stakeholders have offered mixed reactions to the latest changes.Representatives of local automobile assemblers welcomed the curbs onconcessionary imports, arguing that unrestricted inflows had severelyhampered domestic production and investment in manufacturing capacity. ThePakistan Automotive Manufacturers Association has consistently maintainedthat such schemes distort fair competition and discourage localizationefforts.
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Conversely, associations representing overseas Pakistanis expresseddisappointment, contending that the personal baggage facility representedan earned benefit for expatriates contributing substantially to thenational economy through remittances, which exceeded 30 billion dollars inrecent fiscal years. Several expatriate welfare organizations have signaledintentions to approach relevant forums for reconsideration of the completeban.
Economic analysts view the policy as part of a broader strategy torationalize imports, protect domestic industry and conserve scarce foreignexchange during a period of macroeconomic stabilization supported byinternational financial institutions. The changes complement earliermeasures including higher regulatory duties, advance taxes and restrictionson hybrid vehicle concessions introduced progressively since 2022.
Implementation of the amended policy is expected to commence immediatelyfollowing the issuance of the notification, with customs authoritiesdirected to enforce the new conditions without exception. The CommerceMinistry has indicated that further refinements may be considered based onstakeholder feedback and emerging economic indicators in the coming months.
Source: https://www.dawn.com/news/vehicle-import-policy-amendments
Pakistanis, Import Policy Order
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