ISLAMABAD – The federal government has partially rolled back its earlier plan to reduce or eliminate regulatory duties on 285 imported products, following concerns about the potential impact on local manufacturing and foreign exchange reserves.
This decision came after consultations with stakeholders and a steering committee overseeing the tariff policy. The revised plan, approved by the Tariff Policy Board on Friday, now awaits cabinet approval. The Federal Board of Revenue (FBR) is expected to issue a statutory regulatory order (SRO) on Monday to put the changes into effect.
Initially, the government intended to slash regulatory duties across 1,984 tariff lines, reducing industry protection by 52% over five years. However, under the revised plan, the first-year reduction has been moderated. The rollback will lower the projected revenue loss from Rs200 billion to Rs174 billion.
Sources revealed that committee members warned Prime Minister Shehbaz Sharif about the risk of weak export performance, despite optimistic projections by the World Bank. The State Bank of Pakistan and cabinet members questioned those forecasts, prompting the government to adjust the timeline.
Despite the slowdown, the long-term target remains to bring the average applied tariff rate down from 20.2% to 9.7% over five years. Regulatory duties, additional customs duties, and the 5th Schedule will be gradually phased out. The number of tariff slabs will also be reduced to four, with a maximum rate of 15%.
For instance, instead of eliminating the regulatory duty on polyester fiber, a 2.5% rate will now apply. Moreover, the number of items receiving a 50% duty cut has been reduced from 551 to 473. Duties on 970 tariff lines will now remain unchanged in the first year, up from the earlier 828.
Officials said the changes aim to avoid exposing local industries, especially against low-cost imports from China, to excessive competition too soon. While the government is committed to long-term tariff reform, it has chosen a gradual approach to protect jobs and sustain local production.