ECC Approves 31% Duty on Imported Motorcycle Components

The Cabinet’s Economic Coordination Committee (ECC) on Thursday approved an additional customs duty of 11% on imported tyres and motorcycle parts, while setting a higher 31% duty on motorcycle components imported by manufacturers instead of being produced domestically.

The committee said the move is intended to strengthen protection for local manufacturers by raising tariff barriers on imported goods and encouraging automobile companies to source more components from within Pakistan.

Acting on a proposal submitted by the Revenue Division, the ECC approved amendments to SRO 693(I)/2006 regarding additional customs duties on imported tyres that are also manufactured locally.

Originally issued on July 1, 2006, under Section 18(5) of the Customs Act, 1969, SRO 693(I)/2006 establishes the framework for imposing additional customs duties on designated automotive components and goods imported for vehicle assembly and manufacturing.

Under the existing framework, additional duties are determined according to the relevant Pakistan Customs Tariff (PCT) classifications and the vehicle category for which components are imported, including motorcycles, cars, buses, trucks and tractors.

The notification’s tariff schedule specifies different duty rates for various vehicle categories. These include 17.5% on certain car components, rates ranging from 25% to 35% on selected commercial vehicle and tractor parts, and a listed rate of 32.5% for motorcycle components classified under PCT heading 87.11.

The framework also ties tariff treatment to the localisation of automotive components, distinguishing between imported parts and components that manufacturers are expected to produce within the country.

It allows conditional exemptions for eligible new entrants in vehicle manufacturing, provided they follow approved plans to gradually increase domestic production.

Manufacturers introducing new motorcycle technologies may also qualify for a conditional five-year exemption on eligible imported components, subject to annual localisation targets and other prescribed requirements.

Under the latest ECC decision, an additional customs duty of 11% will apply to imported motorcycle parts, while a higher rate of 31% will be imposed when manufacturers import components rather than producing them locally.

The differentiated tariff structure is intended to encourage greater domestic sourcing and reduce the automobile industry’s reliance on imported components.

The decisions were approved during an ECC meeting chaired by Finance Minister Muhammad Aurangzeb, which also reviewed proposals concerning financing arrangements, institutional reforms and infrastructure development.