Nearly 40% of Pakistan’s Imports Entered Duty-Free

Official data shows that nearly 40% of Pakistan’s imports entered the country without the payment of customs duties during FY2025-26, reflecting the government’s ongoing tariff reform strategy aimed at supporting industrial growth by extending duty concessions to raw materials, machinery, and manufacturing inputs.

According to the data, imports valued at $27.02 billion—representing 39.2% of Pakistan’s total import bill of $68.99 billion—were cleared duty-free during the fiscal year. The remaining $41.97 billion, accounting for 60.8% of total imports, remained subject to applicable customs duties.

The figures indicate a significant shift in import policy, with tariff relief increasingly focused on production-related sectors, while consumer goods and other major revenue-generating imports largely continued to attract customs duties.

As part of the FY2026-27 Budget, the government implemented the second phase of its Tariff Reform Plan (2025–2030) by reducing Additional Customs Duty (ACD) on 3,149 tariff lines and lowering Regulatory Duty (RD) to 20% on more than 1,900 tariff lines.

The machinery sector emerged as one of the principal beneficiaries of these reforms. Out of machinery imports worth $10.87 billion, goods valued at $7.43 billion entered Pakistan without customs duty, while imports worth $3.44 billion remained dutiable.

The chemical sector also received extensive tariff relief, with $6.05 billion of its total $7.49 billion imports qualifying for duty-free treatment. Likewise, the textile sector recorded duty-free imports amounting to $3.63 billion, exceeding the $2.64 billion worth of textile imports that remained subject to customs duties.

Collectively, the machinery, chemical, and textile sectors accounted for more than $17 billion in duty-free imports, representing nearly two-thirds of all imports exempted from customs duties during FY2025-26.

Conversely, petroleum and mineral products continued to contribute significantly to customs revenue. Of total imports valued at $15.8 billion, approximately $14.12 billion, or nearly 89%, remained liable to customs duties.

Similarly, around 97% of imports relating to animal and vegetable fats continued to attract customs duties. Imports of vehicles, aircraft, and vessels worth $3.68 billion out of a total $3.94 billion also remained dutiable.

In the base metals category, imports worth $4.29 billion out of a total $6.27 billion were subject to customs duties. Vegetable products attracted duties on $2.89 billion of imports from a total of $4.39 billion, while plastic, rubber, and related products recorded dutiable imports of $2.67 billion against overall imports of $3.68 billion.

Customs authorities stated that the revised tariff policy is primarily designed to support industrialisation by reducing input costs through concessions on capital goods, industrial machinery, chemicals, and manufacturing materials. At the same time, petroleum products, transport equipment, edible oils, and other consumer-oriented imports continue to constitute the primary source of customs revenue.