The government’s recently proposed tariff policy under the National Tariff Policy 2025–30 has sparked intense debate and concern across Pakistan’s industrial landscape.
While aimed at promoting an export-led economy, critics argue that the policy—centered around sharp reductions in import duties—could ultimately undermine local manufacturing and benefit foreign producers at the cost of domestic industry.
The Engineering Development Board (EDB), acting under the Ministry of Industries and Production, formally notified stakeholders of the new tariff policy on May 17, 2025. According to the letter, the policy includes the phased elimination of Additional Customs Duty (ACD), Regulatory Duty (RD), and a major restructuring of the customs tariff into fewer and lower slabs, with the maximum duty capped at 15 percent. The intention, as stated by the government, is to simplify the tariff structure, reduce the cost of inputs for exporters, and improve competitiveness in global markets.
However, this seemingly progressive policy has drawn strong criticism from industrial groups, manufacturers, and business chambers who argue that the move could severely weaken local production capacity. A follow-up meeting held on May 19 via Zoom was overwhelmed by participants, many of whom voiced deep apprehension over the policy’s timing and potential impact.
Opponents of the tariff policy say that while reducing duties might encourage exports in the long run, the immediate effect will be an influx of cheaper imported finished goods. This would erode the price competitiveness of locally manufactured products and may force many industries—especially small and medium-sized enterprises (SMEs)—to shut down or reduce operations.
One industrialist put it bluntly: “If finished goods can be imported at a 15 percent tariff, what incentive remains for anyone to manufacture locally? We will become a trading nation, not a producing one.”
There is also growing frustration over the lack of transparency and consultation. Many stakeholders claim they had already submitted their budget proposals after a thorough consultative process with government departments, including the EDB. The sudden unveiling of such a sweeping tariff policy, they argue, contradicts the collaborative spirit required for long-term industrial planning. More concerning is that the policy was introduced at a late stage in the budget cycle, with little time for adjustments or revisions.
While the government defends the policy as a strategic shift toward long-term export growth, the lack of clear safeguards for local manufacturers has left many skeptical. The EDB itself refrained from explicitly endorsing the reforms during the consultative meeting, merely urging stakeholders to submit their objections in writing.
In a country where the industrial sector is already grappling with energy shortages, inflation, and high input costs, this tariff policy may add to the burden rather than relieve it. Without a carefully calibrated approach that balances import liberalization with support for domestic production, the policy risks becoming a recipe for de-industrialization.
In conclusion, while the intent behind the tariff policy might align with global trade norms, its current form appears to tilt too heavily in favor of imports. Unless revised with adequate protections for local manufacturers, this policy may end up weakening the very industrial base it aims to strengthen.