'Complex tariff system costing billions'

Study advocates growth-oriented reform of trade, industrial policy

ISLAMABAD:

A new 'Policy Viewpoint' from the Pakistan Institute of Development Economics (PIDE) has warned that Pakistan's protectionist and overly complex tariff system is costing the economy billions of rupees annually, suffocating industrial competitiveness and trapping the country in a cycle of inefficiency.

Authored by Dr Uzma Zia, Senior Research Economist at PIDE, the study titled "Rationalising Pakistan's Tariff Regime for Export-Led Growth" presented a compelling case for urgent, growth-oriented reform of the country's trade and industrial policy framework, said a press release issued on Monday.

According to the study, Pakistan's tariff regime – dominated by regulatory duties, additional customs duties and the 5th Schedule exemptions – has long protected inefficiency, distorted price signals and raised production costs.

As a result, both manufacturers and consumers faced inflated costs, while export-oriented industries are handicapped by an anti-export bias. "Every additional year under the current tariff system slows export growth, raises production costs and deepens the trade deficit. Pakistan can no longer afford this inefficiency," Zia cautioned.

The upcoming National Tariff Policy (NTP) 2025-30 provides a clear roadmap for reform, aiming to eliminate additional customs duties within four years and regulatory duties within five years, while shifting products from the 5th Schedule to the 1st Schedule.