ISLAMABAD: Pakistan’s tariff rationalisation drive has reshaped the country’s import composition with nearly two-fifths of the total import bill entering duty-free during the outgoing fiscal year (FY26), official data showed on Thursday.
The figures suggest a marked shift in the composition of imports towards duty free industrial inputs aimed at lowering input cost and improving competitiveness, while a majority of commodity imports remained dutiable.
The official data, available with Dawn, showed that imports worth $27.02 billion, or 39.2 per cent of the total import bill of $68.99bn, entered the country without customs duties, while $41.97bn, or 60.8pc, remained subject to import duties in FY26.
The government has implemented the second-phase of the five-year Tariff Reform Plan (2025-2030) in the budget for FY27 by slashing additional customs duty (ACD) on 3,149 tariff lines and reduced regulatory duties (RD) to 20pc on more than 1,900 tariff lines.
Concessions increasingly target industrial inputs
The data indicates that duty exemptions are no longer spread evenly across sectors. Instead, they are heavily concentrated in industries that rely on imported raw materials, machinery and intermediate goods, suggesting the impact of tariff rationalisation on industrial inputs.
The shift is visible in machinery, electrical and mechanical equipment, where $7.43bn out of total imports of $10.87bn entered duty-free. This means almost seven out of every 10 dollars spent on machinery imports were exempted from customs duties, leaving only $3.44bn subject to duties.
A similar trend is evident in chemical products, where duty-free imports reached $6.05bn, accounting for more than 80pc of the sector’s total imports of $7.49bn. The textile sector also recorded duty-free imports of $3.63bn, exceeding dutiable imports of $2.64bn, making it another major beneficiary of tariff concessions.
The three sectors — machinery, chemicals and textiles — accounted for over $17bn in duty-free imports, representing almost two-thirds of all duty-free imports during the outgoing fiscal year.
The concentration suggests that tariff concessions are primarily benefiting manufacturing and export-oriented supply chains rather than being distributed uniformly across all import categories.
Contrary to this, sectors dominated by finished products or essential commodities continued to remain largely within the dutiable regime.
Mineral products, the country’s largest import category, remained overwhelmingly taxable. Of imports worth $15.8bn, approximately $14.12bn, or nearly 89pc, attracted customs duties, while only $1.68bn entered duty free.
Similarly, animal or vegetable fats recorded imports of $4.09bn, of which almost 97pc remained dutiable. Vehicles, aircraft and vessels also continued to face duties, with $3.68bn out of $3.94bn in imports falling under the dutiable category.
Similar patterns were recorded in base metals, vegetable products and plastic and rubber products, where dutiable imports substantially exceeded duty-free imports.
Similarly, imports of base metals and articles remained largely dutiable, with $4.29bn of the total $6.27bn import bill subject to duties. Vegetable products also attracted duties on $2.89bn out of total imports of $4.39bn, while plastic, rubber and related articles recorded dutiable imports of $2.67bn against total imports of $3.68bn during FY26.
Customs officials said data showed duty free facility is concentrated in capital goods, industrial machinery, chemicals and manufacturing inputs, while revenue generating sectors, such as petroleum products, transport equipment, edible oils and several consumer-oriented categories, continue to account for the bulk of dutiable imports.
They pointed out that tariff rationalisation has reduced customs duties on production-related imports while preserving duties on sectors that continue to form the core of the country’s customs revenue base. The resulting import structure shows duty exemptions increasingly targeted towards industrial inputs, whereas commodity and consumer related imports remain predominantly subject to customs duties.
Published in Dawn, July 10th, 2026