Budget 2026-27 removes customs duty on over 100 categories of drug raw materials
The Finance Minister announced the full removal of customs duty on raw materials for locally made medicines, including cancer treatments.
In this article
Presenting the federal budget for 2026-27 in the National Assembly on 12 June 2026, Finance Minister Muhammad Aurangzeb announced the complete abolition of customs duty on more than 100 categories of raw materials used to make medicines in Pakistan, APP reported.
What was announced
- The exemption covers raw materials for domestic medicine manufacturing, including medicines for cancer and other serious diseases.
- It falls under the National Tariff Policy 2025-30.
- The minister said the aim was to make “life-saving treatments more affordable and accessible across the country,” noting the strain cancer places on families.
Why raw materials matter so much
Pakistan makes most of its finished medicines at home but imports almost all of its active ingredients and other raw materials. Health Minister Mustafa Kamal put the figure at almost 90% in July 2026. Every rupee of duty on those inputs flows into the price of the finished product, so removing it lowers production costs directly.
What it means for the supply chain
| Who | Likely effect |
|---|---|
| Manufacturers | Lower landed cost of imported inputs for covered categories |
| Importers and distributors of APIs | Simpler pricing on covered materials |
| Patients | The stated aim is cheaper life-saving treatment |
How duty reaches the patient
Customs duty is charged on the value of imported goods when they arrive. For a medicine manufacturer, that cost becomes part of the price of every input — and because other charges and margins are often calculated on top of the duty-paid cost, the effect can grow as the product moves through the supply chain. Removing duty at the start of the chain therefore lowers costs at every step that follows.
Whether patients see lower prices depends on the pricing regime. For essential medicines under price control, lower input costs ease pressure on manufacturers whose prices are capped; for deregulated medicines, competition decides how much of the saving is passed on. Either way, lower costs make it more likely that medicines stay available.
Checking whether an input qualifies
- Find the tariff line. Each imported material is classified under a Harmonised System (HS) code; the exemption applies to the covered lines.
- Check the conditions. Exemptions can be limited to use by licensed manufacturers or to specific purposes, and may require documents at clearance.
- Talk to your clearing agent and supplier. Correct classification on the invoice and import documents avoids delays at the port.
- Review your costing. Update product costs and pricing applications once the savings are confirmed.
The bigger picture
The budget measure is one of several policies pulling on raw-material supply at the same time. Lower duty makes imports cheaper today; the Pakistan–China investment pacts and the API localisation goal aim to build local production for tomorrow. Policymakers will need to balance the two, for example by targeting future incentives at the ingredients Pakistan is best placed to make, so that cheaper imports and new local plants complement rather than undercut each other.
Questions to put to your supplier
- Under which HS code is this material invoiced, and is that line covered by the exemption?
- Will your price to us reflect the duty saving, and from which shipment?
- Do you have the documents customs will need to clear the material duty-free?
What to watch
The full list of covered tariff lines matters: manufacturers will need to check which of their inputs qualify. Lower duty also makes imported inputs cheaper relative to any future local production, so it sits alongside, rather than replaces, the push to make APIs at home — see why Pakistan imports almost 90% of its APIs.
Raw material suppliers and importers exhibit across Halls 1–3 at Pharma Asia 2026.
