Pakistan Considers Abolishing Personal Baggage Scheme

Islamabad: The federal government is reportedly considering abolishing the Personal Baggage Scheme for importing used cars while imposing stricter regulations on the remaining two schemes — Transfer of Residence and Gift Scheme — to curb misuse, according to a report on Tuesday.

The Ministry of Commerce has submitted a summary to the Economic Coordination Committee (ECC) proposing these measures. Officials said the ECC will take the final decision regarding the fate of the schemes.

The move comes amid growing concerns from the auto industry, which argues that liberal import policies are harming local manufacturers. Data from December 2024 to October 2025 shows a sharp increase in used-vehicle imports, with 45,758 vehicles entering Pakistan during this period, nearly 99% from Japan. Other imports came in negligible numbers from Thailand, the US, Germany, Australia, China, Jamaica, and the UAE.

Industry representatives note that regional peers maintain stricter controls: India allows virtually no used-car imports, Vietnam permits 0.3%, and Thailand 1.2%. Pakistan, however, has increasingly liberal policies, particularly after Notification 1895 issued by the Ministry of Commerce on September 30, 2025, which allowed imports of vehicles up to five years old. There are reports that this limit may be removed entirely after June 2026, raising concerns about a surge in aged vehicle imports.

The auto sector, which includes roughly 1,200 factories, provides 2.5 million jobs, generates around Rs500 billion annually in government revenue, and holds approximately $5 billion in foreign investment, warns that import-friendly policies could undermine industrial revival and localisation goals. Shehryar Qadir, Senior Vice Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), said, “Import-friendly policies risk diluting these gains at a time when industrial revival and localisation are declared priorities.”

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Economic analysis highlights that local manufacturers incur about $10,138 in documented imports per vehicle, while used-car importers spend an estimated $14,010 per unit, often through informal channels, intensifying the foreign-exchange impact. Industry losses for local vendors are estimated at Rs50 billion during the analysed period.

The government is reportedly drafting a new Auto Policy to strengthen domestic manufacturing, but stakeholders remain divided over whether localisation efforts can succeed alongside liberal used-car import rules. Pakistan’s current approach makes it an outlier among manufacturing economies both in policy and market outcomes.