Pakistan Withdraws Duty Exemption on Hybrid Vehicles Import

Pakistan Withdraws Duty Exemption on Hybrid Vehicles Import

In a move aimed at bolstering the local automotive industry, Pakistan has announced the withdrawal of customs duty exemptions on the import of hybrid vehicles starting from the fiscal year 2024-25.

This announcement was made by Finance Minister Mohammad Aurangzeb during his budget speech a day earlier.

The decision marks a significant policy shift from the exemptions initially granted in 2013, which were aimed at offsetting the high prices of hybrid vehicles compared to ordinary vehicles. The finance minister explained that the price gap between hybrid and conventional vehicles has since narrowed significantly, justifying the removal of these exemptions.

“With the narrowing price difference between hybrid and normal vehicles and the commencement of local assembly of hybrid vehicles, the government has decided to withdraw the duty exemptions from July 1, 2024,” Aurangzeb stated. This policy change is intended to promote and support the local automotive manufacturing sector by reducing the dependency on imported hybrid vehicles.

In addition to withdrawing exemptions on hybrid vehicles, the finance minister also announced the elimination of duty and tax concessions previously granted to luxury electric vehicles. He emphasized that individuals importing luxury electric vehicles valued at $50,000 or more should pay duties and taxes at normal rates.

“The rationale behind eliminating these duty and tax concessions is to ensure that those importing high-end luxury electric vehicles contribute fairly through standard tax rates,” Aurangzeb explained.

The withdrawal of these exemptions is expected to impact the automotive market, potentially increasing the cost of imported hybrid and luxury electric vehicles. However, it is also anticipated to provide a significant boost to the local automotive industry by encouraging domestic production and assembly of hybrid vehicles.

Industry experts have mixed reactions to the announcement. Some welcome the move as a necessary step to support local manufacturing, while others express concerns about the potential increase in vehicle prices for consumers.

“The withdrawal of exemptions is a positive move for the local industry, encouraging domestic production and reducing reliance on imports,” said an automotive industry analyst. “However, consumers might face higher prices, which could affect the overall demand for hybrid and electric vehicles.”

As Pakistan navigates this policy shift, the focus remains on balancing the support for local industries with the needs and affordability for consumers in the evolving automotive market.