Nearly 40% of Pakistan’s imports entered duty-free in FY26 after tariff reforms

Nearly 40% of Pakistan’s imports entered the country without customs duties during FY2025-26 as the government’s tariff reforms shifted tax concessions towards industrial raw materials, machinery and other manufacturing inputs, Dawn reported, citing official data.

Data shows that imports worth $27.02 billion, or 39.2% of the total import bill of $68.99 billion, were cleared duty-free during the fiscal year. The remaining $41.97 billion, or 60.8%, remained subject to customs duties.

The figures highlight a change in the composition of imports, with tariff concessions increasingly directed at production-related goods while consumer products and key revenue-generating imports largely continued to attract customs duties.

The government implemented the second phase of its five-year Tariff Reform Plan (2025-2030) through the FY2026-27 budget, reducing additional customs duty on 3,149 tariff lines and lowering regulatory duties to 20% on more than 1,900 tariff lines.

Machinery emerged as one of the biggest beneficiaries of the policy. Of total machinery imports worth $10.87 billion, goods valued at $7.43 billion entered duty-free, while imports worth $3.44 billion remained dutiable.

Chemical products also received substantial concessions, with $6.05 billion of the sector’s $7.49 billion imports exempt from customs duties. In the textile sector, duty-free imports totalled $3.63 billion, exceeding dutiable imports of $2.64 billion.

Combined, the machinery, chemicals and textile sectors accounted for more than $17 billion in duty-free imports, representing almost two-thirds of all duty-free imports during FY2025-26.

In contrast, imports of petroleum and other mineral products largely remained taxable. Of total mineral product imports worth $15.8 billion, around $14.12 billion, or nearly 89%, were subject to customs duties.

Similarly, almost 97% of imports of animal and vegetable fats remained dutiable, while vehicles, aircraft and vessels worth $3.68 billion out of total imports of $3.94 billion also attracted customs duties.

Base metals and related articles recorded dutiable imports of $4.29 billion out of a total import bill of $6.27 billion. Vegetable products attracted duties on $2.89 billion of imports worth $4.39 billion, while plastic, rubber and related products recorded dutiable imports of $2.67 billion against total imports of $3.68 billion.

Customs officials said tariff concessions are now concentrated on capital goods, industrial machinery, chemicals and manufacturing inputs to reduce production costs and improve competitiveness. Meanwhile, petroleum products, transport equipment, edible oils and other consumer-oriented imports continue to account for most customs revenue.