Pakistan automakers seek Gift Scheme review as used-car imports surge

Pakistan's automotive industry has urged the government to immediately review the vehicle Gift Scheme, warning that a sharp increase in used vehicle imports is threatening domestic manufacturing, investment, employment and the local vendor industry.

In a letter dated October 28 to Prime Minister's Adviser on Industries and Production Haroon Akhtar Khan, the Pakistan Automotive Manufacturers Association (PAMA) called for safeguards against alleged misuse of the scheme and requested a review by the Ministry of Commerce.

How sharply have Gift Scheme imports increased?

PAMA said imports under the Gift Scheme rose from seven vehicles in May 2026 to 806 in June, 1,876 in July, 1,406 in August and 2,238 in September. The scheme reportedly accounted for approximately 98% of all used vehicle imports in September, while imports under the Transfer of Residence Scheme remained negligible.

Razi-ur-Rahman, director general of PAMA, wrote that the extraordinary increase suggested the scheme was being used beyond its intended purpose and warranted an immediate review of monitoring and verification procedures.

PAMA said it supported genuine facilitation measures for overseas Pakistanis under SRO 61(I)/2026, issued on January 15, 2026.

The notification abolished the Personal Baggage Scheme for used vehicle imports and required vehicles brought in under the remaining Gift and Transfer of Residence schemes to remain nontransferable for one year.

The association said the shift in imports from the Baggage Scheme to the Gift Scheme raised serious questions about certification and approval processes overseas, warning of possible coordinated activities facilitating commercial vehicle trading through a scheme intended for overseas Pakistanis.

How could rising imports affect local manufacturers?

PAMA said Pakistan's automotive industry had invested more than PKR 1 trillion in establishing domestic manufacturing capabilities and developing a local supply chain.

The association said 31-plus brands offering more than 100 models operated through 13 manufacturing plants in the country, with localization reaching approximately 60% in many vehicle categories.

It warned that the continued influx of used vehicles could undermine these investments and weaken the government's objectives of industrialization and import substitution.

PAMA also expressed concern over tariff reforms under the National Tariff Policy, saying sharp reductions in import duties and depreciation of up to 60% on used completely built-up (CBU) vehicles were eroding the competitive position of domestic manufacturers.

It said further liberalization of used vehicle imports could discourage local manufacturing, technology transfer, employment generation and fresh investment in the automotive sector.

What changes is PAMA seeking?

The association called for a comprehensive review of certification, verification and monitoring procedures to ensure that the Gift Scheme was not being used for commercial vehicle trading.

It also urged the government to reassess policies encouraging excessive used vehicle imports and ensure that import-related measures remained aligned with Pakistan's industrial development objectives.

PAMA said a balanced regulatory framework should facilitate genuine overseas Pakistanis while protecting domestic manufacturing, employment, investment and the long-term sustainability of the automotive industry.

The association also requested an opportunity to present its concerns and recommendations to the government in person.