pakistan Restricts Used Car Imports, Tightens Regulations
The Pakistani government has amended its import policy, considerably restricting the import of used cars. Effective promptly, the “personal baggage scheme” for importing used vehicles has been abolished, limiting imports to the “transfer of residence” and “gift” schemes. these changes aim to balance the needs of overseas Pakistanis with the protection of the domestic automotive industry.
Changes to import Schemes
Under the revised Import Policy Order 2022, individuals can now only import used cars through the following methods:
- Transfer of Residence Scheme: This scheme applies to overseas Pakistanis relocating back to Pakistan. Vehicles imported under this scheme must originate from the country where the individual resides. The timeframe for importing vehicles under this scheme has been extended to 850 days from the date of the last import declaration, up from the previous 700 days.
- Gift Scheme: Vehicles can be imported as gifts, but both schemes are now subject to stricter regulations.
Vehicles imported under both the gift and transfer of residence schemes will be subject to the same safety and environmental standards applied to commercially imported used vehicles, as resolute by the Ministry of Industries and Production and the Engineering Development Board (EDB). Furthermore, these vehicles will be non-transferable for one year from the date of importation.
Rationale Behind the Changes
The move to restrict the personal baggage scheme follows a surge in used car imports. In fiscal year 2025, approximately 40,000 used cars were imported, contributing $500 million in duties and taxes. During the first six months of fiscal year 2026, another 18,000 units were imported.The government’s decision is intended to support the local automotive industry and ensure that imported vehicles meet safety and environmental standards.
usman Aslam Malik, Chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), stated that the regularization of these schemes is a positive step towards protecting the local industry while still accommodating the needs of genuine overseas Pakistanis. Dawn reported on this sentiment on January 16,2026.
Impact on the Automotive Market
The All Pakistan Motor Dealers Association (APMDA) has expressed concerns about the impact of these changes. H.M. Shahzad, Chairman of APMDA, anticipates a decline in used car arrivals in 2026 and warns of potential revenue losses for the government. He also noted that 99% of previously imported used cars arrived under the personal baggage scheme, and 90% of those were small cars (660cc) primarily sourced from Japan.
Commercial Import Regulations
Commercial imports of used cars are also facing increased scrutiny. A 40% regulatory duty has been imposed on used cars under five years old, effective until June 30, 2026. This duty will be reduced by 10% annually, reaching zero by fiscal year 2030.Standard operating procedures for commercial imports are currently under development.
key Takeaways
- The personal baggage scheme for used car imports has been abolished.
- Imports are now limited to the transfer of residence and gift schemes, with stricter regulations.
- Imported vehicles under these schemes are non-transferable for one year.
- The government aims to protect the local automotive industry and ensure safety standards.
- A 40% regulatory duty applies to commercial imports of used cars under five years old, decreasing annually.
