The federal government is preparing to announce a wide-ranging tariff relief package in the FY2026-27 budget, aimed at lowering the cost of imported raw materials and intermediate goods used by local manufacturers, as part of a broader push to revive industrial growth and exports.
According to official sources, the proposed measures fall under the National Tariff Policy 2025-30 and are expected to provide cumulative relief of nearly Rs. 200 billion to the manufacturing sector.
The plan focuses on reducing or eliminating additional customs duty on thousands of imported items that form the backbone of industrial production across multiple sectors.
Under the proposal, the government plans to fully abolish the 2 per cent additional customs duty on 518 tariff lines that currently fall within the 15 percent customs duty slab.
At the same time, the 4 per cent additional customs duty applied to 2,166 tariff lines under the 20 percent customs duty category will be reduced to 2 percent.
For items where customs duty exceeds 20 percent, the additional customs duty will be lowered from 6 percent to 4 percent on 465 tariff lines.
In total, the proposed cuts will cover 3,149 tariff lines, primarily targeting industrial raw materials, intermediate goods, and key manufacturing inputs. Officials say the focus has been deliberately placed on inputs rather than finished goods to ensure that domestic producers benefit directly from lower costs rather than facing increased import competition.
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Alongside the cuts in additional customs duty, the government is also planning significant reductions in regulatory duties. Under the draft proposal, the maximum regulatory duty rate will be reduced from 50 percent to 20 percent on around 1,948 tariff lines. On average, regulatory duty rates are expected to decline by nearly 20 percent, offering further cost relief to manufacturers reliant on imported components.
The tariff rationalisation is expected to benefit a broad range of industries, including textiles, engineering goods, chemicals, plastics, iron and steel, pharmaceuticals, auto parts, batteries, and other export-orientated sectors that have struggled with rising input costs in recent years.
Government officials believe the proposed tariff cuts will help reduce production expenses, improve operational efficiency, and enhance the global competitiveness of Pakistani products.
By lowering the cost of imported inputs, policymakers hope local manufacturers will be better positioned to expand output, regain lost export market share, and integrate more effectively into regional and global supply chains.
The reforms are part of a longer-term strategy under the National Tariff Policy 2025-30, which aims to gradually phase out Additional Customs Duties over four years and Regulatory Duties over five years.
The policy also seeks to simplify Pakistan’s tariff structure, reduce excessive protection for inefficient sectors, and shift the economy toward export-led growth.
In practical terms, the government’s objective is to make essential industrial inputs cheaper so factories can produce goods at lower cost, improve profitability, and compete more effectively in international markets. If approved in the upcoming budget, the package is likely to be welcomed by manufacturers at a time when industries are grappling with high energy prices, elevated financing costs, and shrinking margins.
For Pakistan’s industrial sector, the FY2026-27 budget may therefore mark a critical turning point, signaling a policy shift away from protectionism and toward competitiveness-driven growth.
