A sudden government decision to slash import taxes on fully built motorcycles has sparked massive panic among local manufacturers. They warn it could kill local bike production.
Pakistan’s motorcycle industry is facing a major crisis due to a new tax change effective 1 July 2026. The government has drastically cut the import duty on fully built motorcycles (CBUs) from 50% down to just 30%.
However, the government kept the import tax on completely knocked-down (CKD) bike kits and localized parts at the same old rates. This has created a massive problem for local factories.
Why Local Bike Making is in Trouble
Local auto experts say this new policy entirely ruins the incentive to manufacture bikes inside Pakistan.
- Before this change, importing a fully built bike carried a 50% tax, while importing parts carried a 15% tax. That 35% gap made it cheaper to build bikes locally. Now, that gap has shrunk to just 15%.
- Because of separate local industry taxes, the total duty on making certain local bike parts stands at 46%. This means importing a fully finished foreign motorcycle at 30% tax is now much cheaper than assembling one inside Pakistan.
- Pakistan’s two-wheeler sector supports over 500,000 direct and indirect jobs. Local models have achieved up to 90% localization over decades of hard work.
Industry leaders are warning the government that without fixing this tax gap immediately, companies will stop local production and simply start importing foreign bikes, putting half a million jobs at risk.
