Coffee industry calls for reduction in high import duties to boost local businesses

The federal government has been urged to reduce the high regulatory and additional customs duties on bulk instant coffee imports, which were introduced under SRO 840(I)/2021 in June 2021, in order to support the growth of local coffee businesses.

Coffee companies argue that the current duty structure is hindering the growth of the country’s coffee industry. Under the current regime, finished coffee products face duties ranging from 42% to 53%, while even the import of bulk instant coffee, a key raw material for local manufacturers, is taxed at 28%, including a 15% regulatory duty and a 2% additional customs duty. 

In comparison, tea imports are taxed at a much lower rate of 13%, creating a disparity between the two industries.

Industry representatives argue that these high duties not only make it challenging for local businesses to compete but also deter potential investments in Pakistan’s growing coffee sector. 

They suggest that removing the regulatory and additional duties on bulk instant coffee would be in line with the National Tariff Policy, which advocates for the rationalization of tariffs on raw materials to support domestic industries.

The removal of these duties could have a significant impact on the sector. Lower import costs would reduce production expenses for local manufacturers, potentially encouraging more businesses to enter the coffee market and invest in infrastructure. Increased access to affordable raw materials could lead to the establishment of local processing and packaging units, contributing to job creation and economic activity.

For the government, the benefits of a growing coffee industry could extend beyond the immediate reduction in customs revenue. The long-term gains through higher income taxes, sales tax, and job creation could offset any short-term losses. Additionally, enhancing local production could open new opportunities for exporting value-added coffee products, such as ready-to-drink beverages, thereby improving Pakistan’s export profile.

Industry leaders emphasize that reducing the import burden on instant coffee would not only benefit businesses but would be a strategic move to develop a competitive and sustainable coffee industry in the country.