Karachi, May 1, 2025 – The Karachi Chamber of Commerce and Industry (KCCI) has strongly criticized the existing high tariffs on the import of auto parts, asserting that these excessive duties are directly contributing to the widespread smuggling of motorcycle and automobile components across Pakistan.
In its official proposals submitted for the upcoming Budget 2025-26, the KCCI highlighted the urgent need to rationalize import duties on commercial imports of motorcycle and auto spare parts. According to the chamber, the current customs structure imposes a staggering 35% import duty, coupled with an 11% Additional Customs Duty (ACD) as outlined under SRO 484(1)/2016. When including other charges, the total tax impact reaches up to 87% on the import of motorcycle and auto parts.
The KCCI emphasized that these essential auto parts, which are critical for daily transport used by low-income individuals, are being unfairly taxed as if they were luxury goods. “This excessive taxation has not only made legal imports unviable but has also fueled a parallel black market,” the KCCI stated. It estimated that nearly $380 million worth of auto parts—representing 40% of the motorcycle and 60% of the automobile market—are smuggled annually, leading to significant revenue losses for the national exchequer.
To counter this, the KCCI has proposed reducing the customs duty on motorcycle and auto parts to 25%, while eliminating the Additional Customs Duty entirely. Furthermore, the chamber recommended maintaining the 1% customs duty on raw materials used for local manufacturing under SRO 655, which it believes offers sufficient protection for domestic auto parts manufacturers.
The KCCI argued that these changes would make legal imports more competitive, discourage smuggling, and redirect lost revenue back into the formal economy. “Reducing duties on auto parts will not only support government revenue targets but will also make essential vehicle components more affordable for consumers across Pakistan,” the chamber concluded.
The proposal is now under review as part of pre-budget consultations, with stakeholders hoping for a more balanced approach in the upcoming fiscal policy.