Customs duty on import of electric cars cut to 25%

Duty on charging stations for environment-friendly vehicles removed

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 It is, therefore, proposed that 16% customs duty on charging stations for electric vehicles may be withdrawn,” announced Finance Minister Miftah Ismail during the budget speech for fiscal year 2018-19.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.



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.



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 28^th, 2018.

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