Customs duty on import of electric cars cut to 25%

Published: April 28, 2018
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Duty on charging stations for environment-friendly vehicles removed
PHOTO: STOCK IMAGE

Duty on charging stations for environment-friendly vehicles removed PHOTO: STOCK IMAGE

KARACHI: In line with the world trend that is rapidly shifting towards environment-friendly electric cars, the government of Pakistan on Friday announced some facilitation measures to cut costs and encourage the use of such clean vehicles in the country.

This came at a time when several new players were gearing up to enter the auto industry of Pakistan by taking advantage of the auto policy announced in 2016.

“To promote environment-friendly electric vehicles, an enabling fiscal environment for related infrastructure is necessitated. It is, therefore, proposed that 16% customs duty on charging stations for electric vehicles may be withdrawn,” announced Finance Minister Miftah Ismail during the budget speech for fiscal year 2018-19.

“Customs duty on the import of electric cars is proposed to be reduced from 50% to 25%, in addition to exemption from 15% regulatory duty. Import of CKD (completely knocked down) kits for the assembly of electric cars in the country is proposed at 10%,” he said.

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These measures are in addition to the incentives already announced in the Auto Development Policy for 2016-21 that has been widely praised.

Kia, Hyundai and SsangYong Motor Company of South Korea, Germany’s Volkswagen, France’s Renault and Japan’s Nissan have announced plans and formed partnerships to enter Pakistan’s auto market, most probably in the next one year.

Local importers like United Motors and Sazgar, the manufacturers of two-wheel and three-wheel vehicles, have also made plans to enter the country’s lucrative four-wheel industry.

Market talk suggests that a new entrant is aiming to introduce electric cars and the government’s budget measures are also expected to encourage existing manufacturers to enter this arena.

“Electric cars are the future of the auto industry,” remarked Wasif Safdar, who imports used cars for resale.

He said a few used Nissan Leaf electric cars had already been brought to the Karachi port, but because of high duty, their importers defaulted on payments and the cars were later auctioned. “If electric cars have 0cc engine capacity, then how could customs duty be imposed on them,” he asked.

Customs duty slabs for imported cars are defined on the basis of their engine capacity. All Pakistan Motor Dealers Association Chairman HM Shahzad welcomed the budget measures, terming them positive. “No change has been made for the import of used cars and the business will go on as before,” said Shahzad.

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Importers of used cars were a bit uneasy before the budget speech, fearing the government might take some adverse steps.

A few months ago, the government had restricted the import of used cars in an effort to ease the pressure on foreign exchange reserves. However, when thousands of cars were left stranded at the port, the government was forced to revisit its decision and things returned to normality later.

Published in The Express Tribune, April 28th, 2018.

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Reader Comments (6)

  • way ahead
    Apr 28, 2018 - 4:15PM

    Pakistan needs to start manufacturing electric cars, and all its important components, i.e. electric a.c. motors, lithium ion cells, inverters, to be used with a.c. motors etc. there is a big market for electric vehicles and Photo voltaic cells to recharge the electric cars when not in use. Electric cars are more efficient than internal combustion engines, in that the electric combustion engine vehicles transfer only 20 percent of the power to the wheels from the engine, while electric vehicles transfers more than 80 percent. Electric vehicles have fewer parts that cause friction i.e. and the drive train is more efficient, and simple. Roads around the world will see this change within a few years, and Pakistan has to keep abreast by being prepared. Knowledge is the key. Recommend

  • Zia
    Apr 28, 2018 - 4:40PM

    Agreed with Anil Recommend

  • Tahir
    Apr 28, 2018 - 5:07PM

    Does an Hybrid vehicle come under this duty reduction or only pure Electric Vehicles like Tesla are referred here?Recommend

  • Sohaib
    Apr 28, 2018 - 7:05PM

    @Tahir:
    I was looking for an answer of the same question tahir postedRecommend

  • Saad Allahwala
    Apr 28, 2018 - 9:31PM

    Is this for fully electric cars too? like a tesla or a nissan leaf ???Recommend

  • Michael
    Jul 3, 2018 - 5:16AM

    No hybrid means internal combustion engine + Electric motor
    Gasoline, diesel, or CNG + electricRecommend

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