Five-Year Age Cap on Used Vehicle Imports Lifted; PAMA Flags Gift Scheme Abuse and Tariff Reform Concerns

Islamabad: Pakistan's Ministry of Commerce, through an Office Memorandum (OM) issued on October 30, 2026, has clarified that the five-year age limit imposed on used vehicles imported for commercial purposes no longer applies after June 30, 2026. This means that from July 1, 2026, such vehicles can be imported without any age restriction. The memorandum is the latest chapter in a debate that has been running for months between the country's automobile industry and importers, and which has now taken a formal regulatory shape. It is notable that this concession is not a new policy. The original permission was itself granted under a defined time limit and included a pre-agreed removal clause. Viewed from this angle, the October 30 OM is an implementation step, not a freshly drafted rule. That is why its legal mechanics are considered internally consistent and low on ambiguity. Inter-agency coordination is also visible in the matter. The Federal Board of Revenue (FBR) sought a formal clarification from the Commerce Ministry on October 23, and within seven days, on October 30, the Ministry replied. This sequence indicates that there was operational uncertainty at the customs level about the position after June 30, which the memorandum has now resolved. Importantly, the removal of the age limit does not mean that environmental and safety standards have been removed. The standards set under the Engineering Development Board (EDB) and the Ministry of Industries remain in force. But analysts believe that with the limit gone, the entire burden shifts onto enforcement of these standards, and that is precisely where the concern is concentrated. PAMA's Letter and Questions Over the Gift Scheme The Pakistan Automobile Manufacturers Association (PAMA) has written to the Secretary of Commerce registering its objection on the issue. The association's central allegation is not about the age-limit removal itself, but about the procedural integrity of the Gift Scheme. According to PAMA's data, only 7 used vehicles were imported under the Baggage Scheme in May 2026, whereas by September 2026 that number had risen to 2,238 units under the Gift Scheme. The association claims that roughly 98 percent of total used-vehicle imports in September came through the Gift Scheme. The near-complete migration of import flows from one scheme to another within four months is, according to PAMA, a clear signal of channel arbitrage — that is, choosing the route where oversight is weaker. The association alleges that overseas certification is being abused in a coordinated manner, turning concessions designed for personal use into a channel for commercial trade. These figures come from a single source and have not been independently verified, and should therefore be treated with caution. The Industry's Bargaining Leverage PAMA has put forward the industry's scale figures to strengthen its position. According to the association, more than 1 trillion rupees have been invested in the country's automobile sector, 31 brands are present, 13 plants are operational, and the level of localisation has reached approximately 60 percent. The association is using these figures to reframe a narrow customs question as part of the broader national industrial policy framework. Concerns Over Tariff Reform PAMA's second concern relates to tariff reform. The association says that duty cuts on CBU (Completely Built-Up) vehicles and the existing depreciation arrangement, which in some cases can reach up to 60 percent, are narrowing the competitive space for domestic production. The association has demanded a review of the measures taken under the National Tariff Policy. In addition, the import cost of auto parts is cited at approximately 60 billion rupees annually, which further underlines the pressure on domestic localisation. The Stakeholder Landscape The positions of the parties in this dispute are clearly divided. On one side are PAMA and domestic manufacturers, whose investment and localisation record is most at risk. On the other is the Commerce Ministry, which holds rule-making authority and implemented the removal of the age limit while retaining the standards conditions. The FBR has operational control over customs and enforcement. Importers of used vehicles are direct beneficiaries of the removal. And overseas Pakistanis, who use the Gift or Transfer of Residence (ToR) schemes, are the policy's original intended beneficiaries — a politically sensitive constituency whose image could be affected by the perception of abuse. The fact that PAMA wrote to the Secretary of Commerce rather than to the FBR signals that the association wants to escalate the matter politically rather than pursue a technical fix, with the aim of securing a broader policy review. Risk Assessment A sharp rise in used-vehicle imports could weaken domestic manufacturing and investment. Tightening oversight of Gift Scheme certification and verification is seen as the most direct mitigation. Duty cuts and depreciation of up to 60 percent shrink the domestic competitive space, with effects visible over the medium term. The alleged coordinated abuse of overseas certification is the most serious integrity risk, requiring an independent audit. As volumes rise, the risk of violations of environmental and safety standards also increases. And pressure on the import bill creates a medium-level risk for the foreign exchange balance. Overall, the risk level is assessed as high, because the unconditional removal of the age cap, the explosive shift in the Gift Scheme, and unresolved certification-integrity questions together create pressure on the domestic auto sector that far outweighs the modest facilitation benefit. What to Watch Next First, the FBR's monthly import data. If official customs figures diverge from PAMA's 98 percent claim, the abuse narrative will need to be reassessed. Second, the Gift Scheme review — new certification rules may come through the Commerce Ministry or SRO amendments, directly affecting import volumes and the outlook for domestic manufacturers. Third, revision of the National Tariff Policy — any further change in duties or depreciation will redefine the domestic competitive space. It should also be noted that the available data on import trends covers only five months (May to September 2026), which is insufficient for any structural conclusion. The gap between the government's stated intent — facilitating importers — and PAMA's stated fear — the opening of a channel for commercial trade — has not yet been resolved by any independent data. In the coming months, therefore, it will be the FBR's official figures that determine the direction of this debate.