The government has raised import duty on bike parts and vehicle tyres to as much as 31 per cent, triggering a sharp rebuke from a member of its own National Tariff Policy Board.
The Economic Coordination Committee approved the increase at a meeting chaired by Finance Minister Muhammad Aurangzeb on Thursday. Under the decision, additional customs duty rises from 4 to 11 per cent on certain imported radial tyres and motorcycle parts that are also manufactured locally. A separate category of motorcycle parts imported by local manufacturers will see the duty jump from 11 to 31 per cent.
The move amends SRO 693(I)/2006 and is aimed at encouraging domestic manufacturing, according to the government’s stated position.
Import duty bike parts hike bypassed tariff board, member says
Dr Rubina Athar, a member of the National Tariff Policy Board who helped formulate the National Tariff Policy, said the proposal should have been placed before the board before going to the ECC. She argued the decision conflicts with the government’s own policy of reducing trade barriers.
Athar made the remarks during a panel discussion on tariff reforms organised by the UK-funded Revenue Mobilisation, Investment and Trade Initiative. She said import substitution policies had made industries inefficient without delivering real benefits to consumers.
The Finance Ministry confirmed the ECC had approved an additional customs duty of 11 per cent on imported vehicle tyres and motorcycle parts. The duty climbs to 31 per cent on certain motorcycle components when manufacturers import them instead of producing them locally.
Which parts are affected
The higher duties apply to a defined list of components, including licence plates, brackets, side reflectors, decorative parts, foot plates, wheel assemblies, windscreens, seats, toolboxes and centre covers. Imports of these parts from China remain at zero duty under the Pakistan-China free trade agreement.
The Federal Board of Revenue said the proposal originated with the Engineering Development Board of the Ministry of Industries and Production. The Ministry of Commerce said the ECC had approved amendments to SRO 693(1)/2006 covering additional customs duties on certain locally manufactured parts imported by original equipment manufacturers in kit form.
The ministry added that relevant automotive notifications remain in force even though the Auto Policy 2021-2026 expired in June. It also noted the National Tariff Policy Board had previously determined that SRO 693 fell outside its remit as part of a separate policy framework.
Industry voices split on the move
Senior economist Vaqar Ahmed warned that favouring selected sectors in tariff application could undermine the objectives of the tariff policy itself. Nimir Chemicals chief executive Zafar Mehmood said reducing customs duties alone would not necessarily lower costs, given the weight of other taxes and duties.
FBR Member Customs Shakil Shah pointed to a separate burden: advance income tax collected at the import stage ties up businesses’ funds regardless of whether they turn a profit, and he called for eliminating such withholding taxes at import.
Rubatech chief executive Zain ul Abideen argued that the National Tariff Policy, combined with the new energy vehicle policy, threatened the conventional auto industry by favouring new-energy vehicles. Athar responded that industries needed competitive pressure to overcome inefficiencies.
Wajid Bukhari, secretary general of the Pakistan Association of Large Steel Producers, said the tariff policy had not significantly affected steel so far, citing lower interest rates and energy costs.
The duty revision lands amid a wider overhaul of Pakistan’s auto policy framework, with manufacturers and parts makers watching how the new policy takes shape. Talks with the IMF on the auto sector have already stalled once this year, while buyers are hoping for relief measures and watching how EV taxation evolves.
Frequently asked questions
What exactly has the ECC approved?
The ECC approved raising additional customs duty from 4 to 11 per cent on certain imported radial tyres and motorcycle parts made locally, and from 11 to 31 per cent on specified motorcycle parts imported by local manufacturers, through an amendment to SRO 693(I)/2006.
Why is Dr Rubina Athar criticising the decision?
Athar, who helped write the National Tariff Policy, says the proposal should have gone to the tariff board before the ECC, and that the increase contradicts the policy of reducing trade barriers. She argues import substitution has made industries inefficient without helping consumers.
Will motorcycle prices rise?
Not necessarily right away. The impact depends on which tariff lines are covered, how much manufacturers rely on imported components, existing inventories, and whether companies absorb the extra cost or pass it on to buyers.
Are Chinese imports affected?
No. Imports of the listed parts from China remain at zero duty under the Pakistan-China free trade agreement.
*Sources: ProPakistani, PakWheels.*
