Pakistan’s National Tariff Policy 2025–30 envisages progressively reducing customs duties and eliminating additional and regulatory duties to improve industrial competitiveness and reduce the anti-export bias of the existing tariff structure. However, recent research commentary has raised an important question: whether reductions in import duties necessarily translate into higher exports, greater productivity and increased domestic value addition. The experience of enterprises operating under preferential tariff arrangements offers a potential basis for evaluating these reforms.
Pakistan’s Export Processing Zones (EPZs) have provided qualifying duty-free import facilities for decades, while the Export Facilitation Scheme has extended similar benefits to authorized exporters operating outside these zones. According to research cited in the report, six operational EPZs collectively recorded approximately US$910 million in exports during 2023, representing around 3.3% of Pakistan’s goods exports. Although these figures do not independently establish the effectiveness of tariff exemptions, they highlight the importance of examining whether preferential treatment has produced measurable improvements in industrial performance.
The research proposes that FBR, the Export Processing Zones Authority and Pakistan Single Window utilize existing administrative records to compare the performance of businesses benefiting from tariff exemptions with otherwise comparable enterprises. Such analysis could help determine whether duty reductions stimulate exports and domestic value addition or primarily improve profitability without corresponding economic gains. For policymakers and businesses, the effectiveness of tariff reform should ultimately be measured through actual industrial performance rather than the availability of exemptions alone.