Government Revises Tariff Cuts to Protect Industries

Islamabad, June 29, 2025 — The federal government has approved a partial rollback of its plan to eliminate or cut regulatory duties on 285 imported products for FY 2025–26, reversing course after stakeholder concerns over local industry impact, as reported. The Tariff Policy Board on Friday endorsed a revised rationalisation plan, with a summary sent for cabinet approval and the Federal Board of Revenue (FBR) set to issue a statutory order on Monday, effective July 1, 2025.

The original plan to reduce duties on 1,984 tariff lines—slashing protection by 52% over five years—is now adjusted, cutting the projected revenue loss from Rs200 billion to Rs174 billion. Prime Minister Shehbaz Sharif, informed by a steering committee and State Bank of Pakistan (SBP), slowed the first-year cut due to doubts over 10–14% export growth and 5–6% import growth forecasts by the World Bank, risking foreign exchange reserves. The revised goal remains to lower the average tariff from 20.2% to 9.7% over five years, but the initial reduction pace is tempered.

Examples include a 2.5% duty on polyester fiber (not fully removed), with additional customs duties phased out in four years, regulatory duties in five, and the 5th Schedule of customs law aligned. Tariff slabs will shrink to four, capped at 15%, down from a first-year target of 15.7% (customs at 11.2%, additional at 1.8%, regulatory at 2.7%). The 20% cut now covers 538 items (down from 602), and the 50% reduction applies to 473 lines (from 551), with 970 lines unchanged (up from 828), and 142 lines shifted to 20% or less.

Officials cite protection against Chinese competition to safeguard jobs, amid criticism of the World Bank model by the commerce secretary and Finance Minister Muhammad Aurangzeb, who warned of a potential Rs500 billion loss under static conditions. The revised plan now projects a Rs74 billion net gain for FBR with 7–9% revenue growth.

Web context highlights Pakistan’s trade deficits (e.g., $25 billion, web ID: 0), while posts found on X show relief—some back industry support, others question policy shifts. Critically, the narrative of “balanced reform” may mask fiscal uncertainty—web data points to export reliance, and X sentiment suggests distrust in execution, hinting at economic vulnerability.