National Tariff Policy 2025-30: Government to Slash Import Duties in Five-Year Reform Plan

In a major policy shift aimed at promoting export-led economic growth, the Government of Pakistan has announced the first phase of the National Tariff Policy 2025-30, which will be implemented in the upcoming Federal Budget 2025-26. This comprehensive reform plan aims to lower import duties, eliminate additional and regulatory duties, and simplify the customs tariff structure over the next five years.

The Engineering Development Board (EDB), in a circular dated May 17, 2025, confirmed that the policy will gradually restructure the tariff regime to support industrial competitiveness and economic expansion.

Key Features of the National Tariff Policy 2025-30:

As per the EDB circular, the policy outlines the following major reforms:

1. Reduction in Customs Duty Slabs
   The current five customs duty slabs—0%, 3%, 11%, 16%, and 20%—will be reduced to four slabs:

   • 0%

   • 5%

   • 10%

   • 15%
     This includes:

   • Abolishing the 3% slab, shifting items to 0% or 5%

   • Reducing the 11% slab to 10%

   • Lowering the 16% slab to 15%

   • Phasing out the 20% slab entirely over the five-year period

2. Capping Maximum Customs Duty at 15%
   The highest rate of customs duty will be capped at 15%, down from the current 20%, by the end of the plan.

3. Phased Elimination of Duties

   • Additional Customs Duty (ACD) will be completely eliminated in four years, starting with Budget 2025-26

   • Regulatory Duty (RD) will be phased out over five years

4. Abolishment of the Fifth Schedule
   The Fifth Schedule of the Customs Act, which governs the concessional import of capital goods and industrial raw materials, will also be phased out over five years. This is a significant move towards a more neutral and competitive tariff regime.

Economic and Industrial Impact

The policy is part of the government’s export-oriented growth strategy, as directed by Prime Minister Shehbaz Sharif, who termed the announcement a “turning point” in Pakistan’s trade and industrial policy.

“This is a crucial step in driving economic growth through a smarter, more equitable trade policy,” said the Prime Minister during a high-level meeting on the National Tariff Policy.

The EDB has called upon industrial stakeholders to analyze and respond to the plan, emphasizing the need for sector-wise input to assess the implications for local industries, import costs, export competitiveness, and economic productivity.

Stakeholder Consultation

The EDB’s circular invites all industry associations, manufacturers, and trade bodies to submit their feedback on how the proposed tariff restructuring might affect:

• Industrial input costs

• Product pricing and supply chains

• Export margins and competitiveness

• Import substitution and local production

This consultative approach aims to ensure that the policy reforms are aligned with the economic needs of various sectors while fostering sustainable growth.