Govt Set to Take Strong Measures to Reduce Car Imports
The recent influx of new car brands and vehicles has resulted in the escalation of the current account deficit, which has prompted the government to start taking concrete steps to curb the increasing number of vehicle imports in Pakistan
According to an official document, car imports have increased by 669 percent during the last three months. Between July and September 2021, vehicle imports in Pakistan stood at $266.28 million, whereas during the same period last year, the imports amounted to $34.63 million.
The volume of car imports in July 2021 was $123.2 million, whereas, in July 2020, the vehicle imports had amounted to $19.36 million, the document said. Vehicle imports in August 2021 stood at $141.43 million, while those during the same time last year were worth $15.7 million.
Likewise, the car imports in September of 2021 amounted to $1.6 million, while the value of vehicle imports in September 2020 stood at $200,000 only.
The government is planning to intervene and curb vehicle imports to reduce the current account deficit of Pakistan.
According to a source privy to the matter, a proposal has also been put forth to curb rising imports of expensive and luxurious electric vehicles (EVs). The proposal suggests the imposition of a 50 percent Regulatory Duty (RD) on imports of electric vehicles with over 50 kWh battery packs.
Furthermore, the proposal has recommended increasing the RD on vehicles with engine capacity between 1501cc and 1800cc, to 50 percent. It also suggests the imposition of 10 percent Federal Excise Duty (FED) on imported vehicles with the same engine capacity. The proposal also recommends slapping 10 percent FED on locally manufactured vehicles with engine capacity over 1500cc.
The automakers are already waiting for the opportunity to increase the price of their vehicles, amidst the increasing freight charges, worsening chip shortage crisis, and other operational issues induced by the global COVID-19 pandemic. With the enactment of these vehicle import curbing measures, the price hikes in the Pakistani car market would become an absolute certainty.