Pakistan Raises Import Duties on Tyres and Motorbike Parts to Protect Local Industry
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Pakistan raised additional customs duty on imported tyres and motorcycle components on Thursday. The tariff on certain bike parts climbs to 31 per cent to shelter domestic manufacturers.
Cabinet members on the Economic Coordination Committee lifted the additional customs duty on locally manufactured radial tyres and motorcycle components from 4 per cent to 11 per cent. Rates on motorbike parts imported by local assemblers surged from 11 per cent to 31 per cent.
Finance Minister Muhammad Aurangzeb presided over the Islamabad meeting. The committee altered statutory regulatory order SRO 693(I)/2006 on the recommendation of the Revenue Division. These tariff hikes follow the first quarter of the fiscal year and coincide with a staff-level agreement with the International Monetary Fund.
Higher tariffs on tyres and motorcycle components
Imported parts that compete with local suppliers face direct penalties under the new structure. Components brought in by vehicle assemblers take the steepest hit, jumping 20 percentage points to 31 per cent. Finished radial tyres and replacement parts now carry an 11 per cent levy.
Revenue Division documents confirm the amendment to SRO 693(I)/2006 targets imports where domestic manufacturing capacity already exists. Officials structured the differential to push assemblers toward local supply contracts over foreign procurement.
Vehicle assemblers across the country have long relied on imported knock-down kits from China, Japan and Southeast Asia. The wider tariff gap raises landed costs on foreign parts. Assemblers must now absorb the higher expenses or negotiate domestic purchasing contracts.
Protectionist shelter for domestic assemblers
Component vendors gain a protected customer base in a volatile retail market. Two-wheelers dominate urban transport in Karachi, Lahore and Rawalpindi. Consequently, motorbike parts rank among the largest consumer replacement categories in Pakistan.
“The committee altered statutory regulatory order SRO 693(I)/2006 on the recommendation of the Revenue Division.”
Motorcycle manufacturers must now speed up vendor localisation programmes. Assemblers that failed to build local supply networks over the past decade face immediate cost disadvantages. Competitors with higher domestic parts content will hold an edge.
Retail buyers will feel the impact quickly at motorcycle repair shops and tyre dealerships. Importers of Japanese and Chinese radial tyres must raise wholesale prices or lose ground to domestic tyre makers in Punjab and Sindh.
Credit guarantees and small business funding
Credit guarantee measures accompanied the tariff decisions. The State Bank of Pakistan designed a structure to expand lending to small suppliers and the agricultural sector. The scheme provides 20 per cent first-loss coverage on loans to small enterprises, alongside 10 per cent coverage for medium industries and small farmers.
Risk-sharing under the programme will flow through Agency Financial Institutions, connecting non-banking lenders and microfinance firms to state guarantees. The committee also amended the Second Supplemental Trust Deed of the Credit Guarantee Trust Fund. That step expands a housing finance facility created for the Prime Minister’s Mera Pakistan Mera Ghar initiative.
Total supplementary grants cleared during the session reached Rs57.85 billion across 11 allocations. Within that sum, the Small and Medium Enterprises Development Authority secured Rs2 billion to execute its corporate plan.
Restructuring state retail and infrastructure
Industries and Production Division officials secured Rs11.329 billion to shut down the state-owned Utility Stores Corporation. The state retail chain operated thousands of discount grocery outlets nationwide. The closure forms part of a wider push to rationalise state enterprises.
Infrastructure spending took up the rest of the major allocations. The Public Private Partnership Authority received Rs8 billion for project delivery. Meanwhile, the Ministry of Railways received Rs10 billion for the Thar Coal Rail Connectivity Project, linking domestic coal reserves to power stations and industrial buyers.
Export Development Fund balances will also be invested in government securities to earn sovereign yields on idle trade funds. Revised customs tariff schedules take effect immediately across all major customs ports.
Questions & Answers
Q.What is the primary reason for increasing import duties on tyres and motorbike parts?
What is the primary reason for increasing import duties on tyres and motorbike parts?
The duties were raised to protect local manufacturers by making imported products more expensive. The government aims to push vehicle assemblers towards using domestically sourced components over foreign procurement.
Q.Which specific imported items have seen the largest increase in their tariffs?
Which specific imported items have seen the largest increase in their tariffs?
Imported motorbike parts for local assemblers have seen the steepest hit, with tariffs surging by 20 percentage points from 11 per cent to 31 per cent. This aims to encourage local supply contracts.
Q.How will these tariff changes affect retailers and consumers in Pakistan?
How will these tariff changes affect retailers and consumers in Pakistan?
Retail buyers will feel the impact quickly at motorcycle repair shops and tyre dealerships. Importers of foreign radial tyres must raise wholesale prices or lose ground to domestic tyre makers.
Q.What other measures accompanied the tariff decisions to support the local economy?
What other measures accompanied the tariff decisions to support the local economy?
The State Bank of Pakistan introduced credit guarantee measures to expand lending to small suppliers and the agricultural sector, providing first-loss coverage on loans to small and medium enterprises.
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