Pakistan’s coffee industry has urged the federal government to reduce the high regulatory and additional customs duties on bulk instant coffee imports, first imposed through SRO 840(I)/2021 in June 2021, to support the growth of local coffee businesses.
Coffee companies contend that the existing duty structure is stifling the expansion of the nation’s coffee industry. Under current regulations, finished coffee products are subject to duties ranging from 42% to 53%. Additionally, bulk instant coffee—an essential raw material for local producers—is taxed at 28%, which includes a 15% regulatory duty and a 2% additional customs duty, further increasing costs for manufacturers.
On the other hand, tea imports are taxed at a much lower rate of 13%, creating a disparity between the two industries, as reported by Business Recorder.
Industry stakeholders assert that these duties hinder local businesses and deter investment in Pakistan’s growing coffee sector. They stress that eliminating regulatory duty (RD) and additional customs duty (ACD) on bulk instant coffee imports would support the domestic industry by aligning with tariff rationalization guidelines under the National Tariff Policy.
Reducing the duties could significantly benefit the coffee industry. Lower import costs would ease production expenses for local manufacturers, attracting more businesses and investment. With affordable raw materials, firms could establish processing and packaging units, boosting employment and economic activity.
Additionally, cheaper coffee products would make them more accessible to consumers, increasing demand and encouraging market expansion.
While eliminating duties may temporarily reduce customs revenue, the long-term benefits—such as increased income tax, sales tax, and job creation—could offset the initial loss and generate broader economic advantages for the government. Furthermore, improved local production capacity could create opportunities to export value-added coffee products, like ready-to-drink beverages, strengthening the country’s export potential.
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