• The review aims to reduce customs, regulatory tasks
• Exports are expected to increase reforms by $ 5 billion in five years
• Simple average rate to fall from 19pc to 9.5pc
Islamabad: In an important policy change, Prime Minister Shehbaz Sharif has approved a comprehensive five-year tariff reform plan that will be announced in the 2025-26 federal budget, with the aim of drastically reducing customs tasks, additional customs tasks, regulatory tasks on the raw materials and semi-final goods, and a false reduction in the general protection of general protections For selected industries.
The first phase of the reform, which will be launched with the following budget, introduces a simplified customs duty structure with slabs of 0, 5, 10, 15 and 20 percent. The existing 16pc slab will be reduced to 15PC, while the 11PC rate will decrease to 10pc. The 3PC slab will abolish, with products transferred to a zero service category or the new 5pc slab.
The proposed tariff review, seen by Dawn, eliminates the additional customs duty of 2pc in 4,294 tariff lines in the next budget. The plan also includes a reduction in additional customs duty from 4pc to 2pc in 545 rates lines, from 6pc to 4pc in 2,227 tariff lines, and from 7pc to 6pc for all products that are currently subject to a customs duty above 20PC.
The government is ready to reduce regulatory tasks, which currently reach up to 90 percent in several products, which reduces them to a maximum of 30 percent. The Minister of Finance, Muhammad Aurengzeb, has also supported the main review of tariffs to boost industrial production in the country.
Another substantial cut is scheduled for next year’s budget, while the last three years of the plan will see a gradual nominal reduction in rates.
According to estimates, it is projected that this tariff rationalization increases exports by approximately $ 5 billion at the end of the plan implementation, reinforcing Pakistan’s impulse towards a more competitive global commercial position.
Five -year roadmap
Industries such as car, iron and steel, textiles, chemicals and plastics, currently protected by effective rates rates that vary between 100 percent and 150 percent, you will see those reduced rates around 50pc to 60 percent. The prime minister said that the priority of his government is to move away from the replacement of importation to a growth strategy directed by export.
Under its ambitious reform agenda, the Government has established an objective to reduce the simple average tariff of the current 19pc to 9.5pc in five years. A key adjustment in the plan includes restructuring service slabs, replace the existing 0pc, 3pc, 11pc, 16pc and 20PC with a simplified 0pc, 5PC, 10PC and 15PC system. This will not only simplify the tariff structure, but will also bring certainty, transparency and margins in cascade that are easy to manage and fulfill.
At the end of the five -year implementation period, the tariff review will establish a 15PC maximum uniform service slab, eliminating the specific peaks of the sector that previously exceeded 20 percent, mainly affecting the automotive industry.
The additional customs tasks currently established in 2pc, 4pc, 6pc and 7pc in several slabs will be gradually eliminated to zero within the next three to four years.
Regulatory duties, which currently vary from 5 percent to 90PC in several products, will also be completely eliminated for five years, relieving import costs and improving market accessibility.
In addition, the fifth customs calendar, which provides specific tariff concessions of the industry, will dissolve, with all the products covered by the transition to the first schedule gradually.
According to the tariff reform plan, these concessions will be suspended or universally extended, ensuring a more equitable commercial policy in all industries.
Export directed growth strategy
The government has decided to embark on a growth rates policy led by external exports. This great change in commercial policy and rate is based on an exhaustive investigation, evidence of successful economies and Pakistan’s own experience.
Drastic cuts in tasks will provide total support to vulnerable sectors and industries. The principle will be maintained in waterfall and industries will still enjoy substantially high effective protection rates.
The current high, complex and discriminatory tariff structure has favored only a few large companies, which over time have become less efficient and unproductive.
The interests created that take advantage of myths and disconnections around tariff reforms are increasing their voice against reforms, said a senior customs officer. “There is no truth in the statements that tariff rationalization would negatively affect external balance or income generation,” said the officer.
The scientific models used in policy analysis suggest that, although imports can increase slightly, exports are expected to grow at a faster rate, improving the commercial balance. More than 45 % of imports are inelastic, which comprise food and energy, and historically, the peaks on the import invoice have arisen from increases in global prices instead of imports of industrial inputs.
This change in import replacement to an exports policy is expected to grant a very necessary impulse to the economy. The lowest tariffs will reduce anti-export bias and help companies, especially small businesses in textile, agricultural and light engineering sectors, to integrate into global value chains, politics said.
Posted in Dawn, May 16, 2025
