Govt Slaps 40% Tariff on Imported Used Cars to Protect Local Industry

Auto industry has received some breathing space as the government moves to impose steep tariffs on commercial imports of used vehicles.

A Senate committee confirmed that from next month, imported used cars will face a 40% duty, aimed at discouraging large-scale inflows and giving local manufacturers room to recover.

Under the new policy, commercial importers will be allowed to bring in used cars up to five years old starting September. Age and quality restrictions are expected to be relaxed further by July next year. Officials, however, indicated that environmental compliance will be strictly monitored to ensure only cleaner vehicles enter the market.

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Despite the announcement, consumers are unlikely to benefit immediately. Small cars like Suzuki Alto already cost around three million rupees, with taxes accounting for nearly 60% of the price.

Industry insiders warn that the local sector is operating at less than half its capacity and that manufacturing costs remain high, making trade more lucrative than production.

The tariff is expected to reduce gradually to zero over the next four years, eventually opening the market to older vehicles. While this may increase competition, the current move is largely seen as a protective measure for domestic players struggling with low demand, high inflation, and tight financing options.