Pakistan has made big changes to its import taxes. In fiscal year 2025-26 (FY26), duty-free imports reached $27.02 billion. This is nearly 40% of the country’s total import bill of $68.99 billion. The remaining $41.97 billion still faced customs duties.
This rise comes from the government’s five-year Tariff Reform Plan (2025-2030). The goal is to make production cheaper, help local industries compete better, boost exports, and simplify tax rules. In the FY27 budget, the government took the second step by cutting Additional Customs Duty on over 3,000 items and limiting Regulatory Duty to 20% on many others.
Most duty-free benefits went to industries. The machinery and electrical equipment sector got the biggest share, with $7.43 billion out of $10.87 billion imports coming duty-free. The chemical sector followed, with over 80% of its imports exempt. Textile makers also gained, importing $3.63 billion worth of materials without duties. Together, these three sectors made up nearly two-thirds of all duty-free imports.
On the other hand, consumer goods and essentials like mineral products, edible oils, and vehicles mostly stayed under duties. This approach helps protect government revenue while supporting factories and export businesses.
These reforms are intended to lower costs for manufacturers, encourage new investments, and make Pakistani goods more competitive in global markets. By focusing help on raw materials and machines instead of finished products, the policy aims to strengthen local industry and support long-term economic growth.