LAHORE: High customs tariffs and massive regulatory duty on bulk raw coffee imports are inhibiting investment in the market expansion and suppressing the country’s coffee export potential, industry sources say.

“The excessively high tax burden on raw coffee imports pose a significant growth barrier to developing a robust market and exploring export potential. The government should remove both regulatory duty and additional customs duty on the import of bulk instant coffee,” a source observes.

The imposition of SRO 840(I)/2021 has massively spiked import taxes on coffee. The imports of finished products have duties between 42pc and 53pc, and the bulk raw material (instant coffee) imports are subject to 28pc ((including 15pc regulatory duty and 2pc additional customs duty in addition to 13pc customs tariff) import taxes. This is in stark contrast to the just 13pc duties on tea imports.

Removal of these discriminatory and disproportionately high import taxes on coffee will also be in line with the policy guidelines set by National Tariff Policy, according to the source.

The policy promises gradual reduction in tariffs, regulatory duties and additional customs duty on raw materials, intermediate and capital goods. Besides, the policy envisages elimination of the difference in the rates of tariff for the commercial importers and the industrial users of raw materials, intermediate and capital goods to reduce misuse of such differentials and to provide access to such essential materials for the small and medium enterprises (SMEs).

The rationalisation of the coffee taxes will help Pakistan become a part of the global supply chain of the world’s most popular drink.

The industry sources say the reduction in the tax burden on coffee imports will leave a number of positive impacts on the market. “Reduced import duties will lower the cost of importing instant coffee, making it more affordable for local businesses to import bulk raw materials.

This can encourage companies to invest more in local coffee cultivation, value addition, packaging, branding, and exports. With lower import costs, companies are more likely to invest in local manufacturing and infrastructure. This investment can lead to the establishment of local production facilities, creating jobs and boosting the economy,” an industry executive says.

“If you lower import duties, it will instantly make coffee affordable for a broader range of consumers, which will drive up demand and encourage more businesses to invest in coffee market expansion,” she says.

It is besides the point that the increased investment and market expansion will lead to higher government revenue through taxes and economic growth, and create incentives for companies to explore export markets for value-added offerings like ready-to-drink coffee drinks and help earn foreign exchange for the country.

The industry sources are also of the view that lower import duties will help streamline the supply chain by lowering costs associated with importing coffee. This can lead to more competitive pricing and a wider variety of coffee products available in the market, they added.

Published in Dawn, May 19th, 2025