LAHORE: Companies involved in coffee business in the country have urged the federal government to remove regulatory and additional customs duties on the import of bulk instant coffee, calling the current duty structure a major barrier to the growth of Pakistan’s coffee industry.
The issue stems from SRO 840(I)/2021, introduced in June 2021, which imposed high import duties on coffee. Finished coffee products are subject to duties ranging between 42% and 53%, even the import of bulk instant coffee – the raw material used by local manufacturers – is taxed at a significant 28%. This includes a 15% Regulatory Duty (RD) and a 2% Additional Customs Duty (ACD). In comparison, tea imports are taxed at just 13%, creating an uneven playing field between the two beverage industries, industry stakeholders told Business Recorder.
Industry stakeholders argue that these duties not only make it difficult for local businesses to compete but also discourage investment in Pakistan’s emerging coffee sector. They emphasize that removing RD and ACD from bulk instant coffee imports would align with the National Tariff Policy’s guidelines, specifically under paragraph 6.3, which calls for the rationalization of tariffs on raw materials to support domestic industry.
The potential benefits of reducing these duties are wide-ranging. Lower import costs would directly reduce the production expenses for local manufacturers, encouraging more firms to enter the coffee business and invest in infrastructure. With greater access to affordable raw materials, businesses could set up local processing and packaging units, creating employment and supporting economic activity.
Moreover, reducing duties could help expand the consumer market. Cheaper coffee products would be more accessible to a larger segment of the population, potentially increasing domestic consumption. As demand rises, the sector could see the entry of new players and more diverse offerings, contributing to a robust coffee culture.
The government could also benefit from the broader economic activity generated by a growing coffee industry. While the removal of duties may lower immediate customs revenue, the long-term gains through higher income tax, sales tax, and job creation could more than make up for it. Additionally, enhanced local production capacity would open opportunities for exporting value-added coffee products, such as ready-to-drink beverages, which could boost Pakistan’s export profile.
With the increasing popularity of coffee among younger consumers and the rapid growth of café chains in urban areas, many believe now is the ideal time for policy reform. Industry voices continue to stress that reducing the import burden on instant coffee is not just a business-friendly move, but a strategic step towards developing a competitive and sustainable coffee industry in Pakistan.
Copyright Business Recorder, 2025
