London's black cabs may soon be seen on the streets of major Pakistani cities, including the capital, Islamabad.
The taxis will cater for high income groups
The government is allowing the duty-free import of 300 black cabs from the United Kingdom.
The company importing them also plans to manufacture 18,000 of them a year, the government says. Half of those built in Pakistan will be for export.
The government says it has approved the project to meet an acute shortage of private taxis in the country.
"We have allowed a private company to import 300 black cabs free of import duty," investment minister Omar Ahmed Ghumman told the BBC's Urdu service.
"The company plans to set up a manufacturing plant in Pakistan that will produce 18,000 [black cabs] every year," the minister said.
He brushed aside allegations of lack of transparency over the deal by the opposition.
"This is a deal done with a private company that is willing to invest £850m ($1,570m) in Pakistan," he said.
The cabs will face competition for road space
According to the minister, the main entrepreneur is a California-based Pakistani by the name of Daud Khan who has extensive business interests across the United States.
He says Mr Khan's venture will create 50,000 jobs in Pakistan at the relatively high income level of about $300 per month.
"All procedures laid down by the law were followed while awarding him the contract," he said.
Not so, argues the opposition.
It says the deal was neither properly advertised nor was the bidding held in a transparent manner.
The opposition says that invitations for bidding should have been advertised in at least two major English and Urdu newspapers.
The adverts should also have been placed on the relevant ministry or department's website.
These requirements have not been met.
"We read about it in the newspapers," says Noor Hashmi, a private car dealer in Karachi.
"But by the time we got to know of it, it was a done deal."
Mr Hashmi says car dealers are at a loss to understand why the government felt the need to import duty-free vehicles when similar ones were already being built in Pakistan.
"Where have the existing taxis come from? They are all being built by major manufacturers such as Toyota and Suzuki in Pakistan," he says.
The opposition has asked why similar tariff exemptions have not been granted to other public-oriented ventures in the transport sector.
Lack of transparency allegations have been brushed aside
No duty exemptions were granted to the import of buses running the environment-friendly compressed natural gas, the opposition says.
Taxis cater primarily to high income groups in Pakistan while a vast majority of the workforce relies on buses.
The bidding documents lay down an exact description of the vehicles that are to be imported.
The 2.4-litre, diesel-powered vehicles approved for import should have passenger seats facing each other and a separate lockable cabin for the driver.
Critics say the description is so tightly drawn up that it only qualifies vehicles produced by the UK-based company London Taxis International (LTI), the main manufacturers of the black cab.