The government increases additional customs duty to protect local manufacturers, approves first-loss financing coverage for SMEs and farmers, and clears Rs57.85 billion in supplementary grants.
The Economic Coordination Committee (ECC) of the Cabinet has increased additional customs duty (ACD) on imported tyres and motorcycle parts manufactured locally in Pakistan. The committee also approved financing support for small and medium enterprises (SMEs), small farmers and several development projects.
The decisions were taken during an ECC meeting chaired by Finance Minister Muhammad Aurangzeb on Thursday. The meeting also approved investments from the Export Development Fund (EDF) in government securities and sanctioned supplementary grants worth Rs57.85 billion.
Customs Duty Increased on Tyres and Motorcycle Parts
Under the revised duty structure, the additional customs duty on imported radial tyres manufactured locally has been increased from 4% to 11%. Meanwhile, the duty on motorcycle parts manufactured in Pakistan has been raised from 11% to 31% for imports by local manufacturers.
According to the official statement, the ECC approved amendments to SRO 693(I)/2006 following a summary submitted by the Revenue Division. The changes aim to strengthen domestic manufacturing, support local industries and improve the competitiveness of Pakistani producers against imported products.
Financing Support for SMEs and Small Farmers
The ECC approved a financing framework developed by the State Bank of Pakistan to expand access to credit for SMEs and small farmers. The arrangement will bring eligible Agency Financial Institutions, including microfinance and non-banking financial institutions, into existing government risk coverage schemes.
Under the framework, first-loss coverage will be provided for up to 20% of eligible SME loans, while small farmers and medium-sized industries will receive coverage of up to 10% each. The initiative is intended to encourage lending by reducing financial risks for participating institutions.
The committee also approved an addendum to the Second Supplemental Trust Deed of the Credit Guarantee Trust Fund. The amendment expands the existing facility to improve the utilisation of credit guarantees for affordable housing finance under the government’s housing initiative.
Rs57.85 Billion in Supplementary Grants Approved
The meeting approved 11 supplementary grants totalling Rs57.85 billion for various government departments and projects.
These included Rs2 billion for the Small and Medium Enterprises Development Authority to implement its approved business plan and Rs11.329 billion for the Industries and Production Division to meet the Utility Stores Corporation’s immediate funding needs and support its closure process.
Additionally, Rs8 billion was approved for the Public Private Partnership Authority to facilitate infrastructure development. The Ministry of Railways received approval for a Rs10 billion grant to support the Thar Coal Rail Connectivity Project, which aims to facilitate the use of domestic coal for electricity generation and industrial activities.
The decisions reflect the government’s efforts to support local manufacturing, expand access to financing and fund priority economic initiatives.