The International Monetary Fund (IMF) has approved a major revision to Pakistan’s car import regulations, allowing the import of vehicles up to five years old, marking a shift from the previous cap, which restricted imports of cars no older than three years. The updated policy is scheduled to take effect in September 2025.

During a briefing to the Senate Standing Committee on Finance, the Ministry of Commerce declared the update, clarifying that it covers imports of both personal and commercial vehicles. To curb over-importation, the government also plans to impose an extra 40% duty on cars that are five years old.

The additional duty will be gradually reduced by 10% annually and fully eliminated by the 2026–27 fiscal year, after which only regular import duties will remain. Beginning in FY27, vehicles up to seven years old will also become eligible for import.

Additionally, cars imported under the baggage scheme will no longer be subjected to the 40% additional duty. This exemption will support expatriates who frequently bring used cars to Pakistan, with eligibility requiring proof of a continuous overseas stay of at least 700 days. It also offers a measure of relief to consumers facing steep inflation and rising auto prices.

The decision is part of broader efforts under the IMF program to liberalize trade and streamline tariffs. While it’s expected to broaden consumer options in the auto market, it could draw resistance from local vehicle assemblers worried about increased competition.

The decision seeks to balance consumer demand with economic stability by easing import rules under IMF reforms, potentially reducing pressure on the new car market and lowering vehicle prices.

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