Pakistan Scraps Five-Year Age Cap on Used Car Imports: PAMA Warns as 98% of Imports Flow Through Gift Scheme

For the customs officers of the Federal Board of Revenue (FBR), the fact that the five-year age cap on used car imports would not apply after June 30, 2026, was a technical question. On October 23, 2026, they sought clarification from the Commerce Ministry — had the cap been removed or not, and if so, on what legal basis. The answer came in an Office Memorandum (OM) dated October 30, 2026: the cap 'ceased to apply', and this concession would be considered effective from July 1, 2026. An internal government letter that pulled customs clearance out of an uncertainty it had been stuck in for four months. But the moment this OM was issued, a bigger question arose — and that question was not about the age cap, but about the route through which these cars are entering the country.

A figure from the Pakistan Automobile Manufacturers Association (PAMA) emerged: 98% of all used car imports in September 2026 were recorded under the Gift Scheme. In May 2026, that number was 7 units; by September, it was 2,238 units. In four months, almost the entire flow shifted from the Baggage Scheme to the Gift Scheme. PAMA termed this coordinated certification abuse and wrote a letter to the Commerce Secretary.

To understand why this matters, one must first understand what the Gift Scheme is.

Gift Scheme, Baggage and ToR: Three Doors, One Purpose

In Pakistan, there are three arrangements for personal-use imports by overseas Pakistanis — the Baggage Scheme (when you return to the country and bring your belongings with you), Transfer of Residence or ToR (when you return permanently), and the Gift Scheme (when you send a vehicle as a gift to a relative living in the country). The intent of all three was the same — to make vehicles available to overseas Pakistanis at a lower cost, without imposing the full commercial import duty on them.

The problem is that the frameworks of these three were never so different that a shift of this magnitude between them could be explained by normal demand. Seven units going through the Gift Scheme in May and 2,238 units in September — this is not a change in demand, it is a change in route. When the same product can come through three different doors and in four months almost the entire flow starts coming through one door, you have to look at where the guard is stationed at that door.

In my experience — and I have built vendor cost and sponsorship inventory models for a tennis Challenger in Bengaluru, where every rupee across 14 separate expense lines had to be accounted for — this kind of 'channel arbitrage' always means the same thing: the cost or scrutiny burden on one route is lower, and the other routes start looking more expensive or more difficult by comparison. The question is not why people are using the Gift Scheme; the question is why the Baggage Scheme and ToR suddenly became unattractive to them.

The Government's Argument: This Is Not a New Policy, It Is the Implementation of an Old Condition

The Commerce Ministry's position is legally coherent. The five-year age cap was from the outset placed with a time limit — until June 30, 2026 — and the provision for its removal was pre-agreed. That is, the October 30 OM is not a new policy, but a document implementing a step already decided. There is a strength in this argument: if the rule was already written that the cap would not apply after this date, then removing it is not granting a new concession.

But there is an uncomfortable truth about the implementation date. The OM was issued on October 30 and the concession was applied retrospectively from July 1. This means that the four-month period from July to October, when customs officers themselves were unclear whether the cap applied or not, was the same period in which the Gift Scheme figures went from 7 to 2,238. This could be a coincidence, but when the clarity of a rule and the speed of imports change together, examining the relationship between them is not dishonesty, it is basic auditing.

PAMA's Two-Front Battle

PAMA's letter is addressed to the Commerce Secretary, not to FBR. This nuance matters. Writing to FBR would mean — 'there is a gap in your scrutiny, fix it.' Writing to the Commerce Secretary means — 'this is a policy matter, bring it under review.' PAMA is seeking political-level intervention, not a technical fix.

It also has bargaining power. According to industry figures, PAMA members have invested over 1 trillion rupees, with 31 brands, 13 plants and around 60% localisation. These numbers are not just commercial facts; they are PAMA's negotiating capital. When you place a customs question in the frame of 'industrialisation and import substitution', you move it out of a customs department's decision and onto the national policy stage.

PAMA's second front is tariff reform. It alleges that duty cuts and up to 60% depreciation concessions on used cars have narrowed the competitive space for domestic production. A technical point is necessary here: the value of a used car imported as a CBU (Completely Built-Up Unit) rests on its depreciation formula. If the formula is generous, the customs-assessable value of a used car falls artificially. That is, removing the age cap is one thing, and the generosity of depreciation is another — together they create the effect PAMA calls 'an uneven contest for domestic industry.'

The Biggest Flaw: The Data Comes from Only One Side

What draws the most attention in this entire debate is that the figures of 98% and 2,238 units are PAMA's. They have not been independently verified against FBR customs data. This is not merely a journalistic weakness; it is a policy-making problem. If the government has its own figure and is not making it public, that silence is also a signal.

I have seen repeatedly in my career that when criticism of a scheme comes from the very party affected by it, the numbers are often correct but incomplete. In 2026, when I modelled a 90-day cash runway for a tennis academy in Bengaluru, we had the number of vendors but no independent survey of members' actual ability to pay. We estimated and turned out right, but we knew it was an estimate. The same situation applies here — the 98% figure is startling, but until FBR independently confirms it, it must be recorded as one side's claim.

Will the Government Review the Gift Scheme?

The next policy flashpoint will not be over the age cap, but over the Gift Scheme. The reason is clear: removing the age cap is a one-time, irreversible step — reversing it would carry enormous political cost. But tightening the certification process of the Gift Scheme is an administrative step that can be done quietly through an SRO (Statutory Regulatory Order). If PAMA's pressure works, the most likely outcome will be stricter scrutiny of overseas certification under the Gift Scheme — such as requiring a certificate from a local dealership or manufacturer.

Who will this affect? Also those genuine overseas Pakistanis who honestly send vehicles to their families. This is the greatest unfairness of this matter — the penalty of abuse allegations falls on those who are not abusing. The solution, therefore, should not be a 'blanket ban' but 'targeted verification.'

The Bottom Line: Used Car Import Is a Business, and Business Needs Accounting

When I build a sponsorship inventory model in sports business, my first question is always — how many pieces does this asset have, and what is the price of each piece. The same question applies to Pakistan's auto policy. The government has opened a door by removing the age cap, but there is no public accounting of the cost and capacity of the scrutiny system standing at that door. If FBR were to disclose how much time and staff it takes to verify the certification of every vehicle coming under the Gift Scheme, the 98% figure would automatically start telling a different story.

Three things are worth watching ahead. First, FBR's monthly import data — if it diverges from PAMA's 98% claim, the entire basis of the debate will change. Second, any SRO amendment to certification rules in the Gift Scheme. Third, any change to the depreciation formula in the National Tariff Policy.

Until these three signals arrive, this debate will remain caught between two sides' claims — on one side the industry protecting its 1-trillion-rupee investment, on the other the government saying it merely followed a pre-decided rule. In between is the consumer who wants a cheaper car, and the overseas Pakistani who wants to send a gift to family. All three have different interests, and all three must be accounted for separately. The day the government publishes its own data, it will become clear whether this was a facilitation or a window opened in the name of facilitation.