Economic Survey 2025-26 highlights increased duty-free imports and sweeping tariff reductions aimed at boosting exports and industrial competitiveness
Pakistan’s imports of duty-free raw materials and intermediate goods increased significantly to 40 per cent of total imports during July–March of fiscal year 2025-26, up from 32 per cent in the corresponding period a year earlier, according to the Pakistan Economic Survey 2025-26 released on Thursday.
The survey noted that the rising share of duty-free imports reflects the government’s efforts to reduce production costs for domestic industries and enhance export competitiveness. It added that the positive impact of these measures is already evident in the growth of the Large Scale Manufacturing (LSM) sector, while benefits for exports are expected to materialise over the medium to long term.
Under the National Tariff Policy (NTP) 2025-30, the government has embarked on comprehensive reforms to rationalise and simplify the import tariff structure, with a strong emphasis on raw materials, intermediate goods and capital equipment. The policy aims to support export-led economic growth by improving competitiveness, ensuring policy predictability and transparency, attracting investment, and facilitating greater integration into the global economy.
The NTP 2025-30 builds upon reforms initiated under the NTP 2019-24 but introduces a broader framework with clearly defined targets. Over the five-year policy period, the maximum customs duty rate will be reduced to 15 per cent, while the tariff structure will be streamlined into four slabs of 0, 5, 10 and 15 per cent.
Additionally, all Additional Customs Duties (ACDs) and Regulatory Duties (RDs) are scheduled to be phased out gradually by 2030.
According to the survey, the previous NTP 2019-24 eliminated Customs Duties and ACDs on 2,198 tariff lines. Sector-specific tariff rationalisation focused on strengthening value chains in industries considered crucial for Pakistan’s export potential, including textiles, pharmaceuticals, and iron and steel.
In the first year of implementing the NTP 2025-30, tariffs have been reduced on nearly 7,500 tariff lines, representing 98 per cent of the total tariff structure, with a particular focus on raw materials and intermediate goods. These measures are intended to lower input costs for domestic manufacturers and exporters, enabling them to compete more effectively in international markets.
The government has also abolished a 2 per cent Additional Customs Duty on 2,156 tariff lines and reduced Regulatory Duties on 1,019 tariff lines. Furthermore, Customs Duty slabs have been revised downward, with rates reduced from 3 per cent to zero, 11 per cent to 10 per cent, and 16 per cent to 15 per cent.
As a result of these reforms, Pakistan’s simple average tariff rate has declined from 20.19 per cent to 16.56 per cent, while the trade-weighted average tariff rate has fallen from 10.62 per cent to 8.64 per cent, reflecting the government’s broader strategy to create a more competitive and investment-friendly trade environment.
