Beverage industry calls for tariff reforms
KARACHI:
Pakistan's food and beverage industry has urged the government to implement tariff reforms to lower production costs, enhance exports, and support local industrial growth.
The All Pakistan Fruits and Vegetables Exporters, Importers, and Merchants Association (PFVA) has proposed budgetary measures, including increasing taxes on finished goods and reducing taxes on raw materials.
PFVA emphasised the crucial role of the food and agriculture sector in Pakistan's economy. However, high tariffs on essential raw materials, packaging components, and imported production elements are limiting growth.
Provisional real GDP data for the first quarter of fiscal year 2025 showed a modest growth of 0.9% compared to 2.3% in the same quarter of fiscal year 2024. This slowdown was primarily due to a sharp deceleration in agriculture sector growth to 1.2% in Q1-FY25, down from 8.1% in the same period last year, according to the State Bank of Pakistan (SBP) governor while announcing the monetary policy on January 27.
The proposed reforms focus on cost reduction, efficiency enhancement, and export growth, said Waheed Ahmed, Patron-in-Chief of PFVA. "By reducing production costs and ensuring a level playing field for local manufacturers, Pakistan can strengthen its presence in international markets."
One key recommendation is lowering import duties on packaging materials such as plastic and paperboard, which currently face high tariffs of 16% and 20%, respectively. PFVA suggests standardising these duties to 8-10% and offering exemptions for exporters, which could significantly reduce packaging costs and make Pakistani products more competitive internationally.
While the government has implemented the Export Facilitation Scheme (EFS) to benefit exporters, certain suppliers who do not directly export but supply processed materials to exporters are still subject to duties, Ahmed noted. PFVA suggests that suppliers of exporters should either be exempt from duties (0%) or be allowed to import materials at a nil-tax rate. This would enable local exporters to obtain materials at lower costs, making their products more competitive globally.
To protect local agricultural produce, PFVA proposes increasing the Regulatory Duty (RD) on imported tomato paste from 20% to 40%, encouraging manufacturers to use locally grown tomatoes. This measure is expected to boost demand for domestic agricultural products and reduce reliance on imports.
Despite a current customs duty of 20% and an RD of 20%, imported tomato paste prices remain lower than local production costs, Ahmed stated. The government should encourage local manufacturers to source from domestic agriculture, boosting investment in food processing and strengthening local supply chains to prevent excessive reliance on imports. He urged the government to review import data on agricultural products to implement protective measures and support domestic farmers.
Another critical reform focuses on reducing import duties on aseptic bags used in juice packaging, which currently face high customs and regulatory duties, including a 20% customs duty, 6% additional customs duty, and 10% RD.
Lowering these taxes would cut juice production costs and strengthen the competitiveness of local manufacturers. Additionally, PFVA recommends shifting the 20% Federal Excise Duty (FED) on fruit juices to the import stage of aseptic packaging, preventing tax loopholes and ensuring fairer taxation.
The government currently imposes a 20% FED on locally supplied fruit juice in aseptic packaging. However, many local manufacturers bypass this tax by importing materials, producing juices domestically, and selling them in the market without paying the appropriate taxes.
Instead of imposing FED at the final product stage, Ahmed suggests applying a 20% FED on aseptic packaging at the import stage. This would prevent tax evasion and ensure that all industry players operate under the same tax conditions. "The impact will manifest in increased government revenue and a level playing field for all manufacturers," he said.
These reforms aim to create a more stable tariff structure, attract investments, and support local manufacturers, he added. If implemented, they could enhance Pakistan's processed food exports, strengthen domestic production, and align with the government's broader economic growth strategy. The industry is urging policymakers to incorporate these measures into the upcoming budget to ensure long-term sustainability and global competitiveness.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
10 hours ago
- Business Recorder
Beyond charity: why Pakistan needs a social business movement
Sustainable development is often discussed as the future, but we rarely pause to ask: what should it actually look like for Pakistan? For decades, we've relied on charity alone to solve social problems. While charity has saved millions of lives and spread hope, yet challenges like hunger, poverty, and inequality persist. In 2007, Nobel Laureate Dr. Muhammad Yunus popularized the concept of social business, the enterprises built to solve human problems, not maximize profit, while sustaining themselves financially. The idea inspired changemakers across continents. This year, for the first time, Pakistan formally joined that global conversation. At the Social Business Day in Dhaka, hosted by the Yunus Centre, Rizq led the first-ever Pakistani delegation. We attended the dialogue as a delegation of youth-led solutions. Standing alongside innovators from over 40 countries, we proudly raised Pakistan's flag and shared our story, a living example of what social business can mean for our people. We saw models from across the globe, like community health cooperatives in Africa, renewable energy enterprises in Europe, local agriculture projects in Asia. Pakistan had never formally been part of that conversation. This year, we changed that. Not only did Rizq lead the first delegation to Dhaka, but we also organized the first local Country Forum in Lahore. Students, academics, and social innovators explored what this model could mean for Pakistan's future. How three friends sparked a nationwide movement Ten years ago, Huzaifa, Qasim, and I started Rizq as an ambitious initiative while we were still sophomores at LUMS. We would drive around Lahore with a car full of surplus food, searching for anyone who might need it. From the beginning, Rizq's approach was different. At our food banks, recovered food wasn't handed out entirely free; but rather sold at just ten rupees per kilogram. This preserved dignity and encouraged participation. Without realizing it, we were already experimenting with what would become our defining philosophy: creating sustainable systems instead of one-time charity. What started as small food recovery drives has now grown into a movement for food justice. Over the past decade, Rizq has saved millions of meals from waste, distributed them to families, supported smallholder farmers, and engaged thousands of volunteers in building a hunger-free Pakistan. But with growth came a familiar challenge: financial fragility. Rizq's work depended largely on seasonal donations and short-term campaigns. Each successful drive was followed by the same question: How do we keep this mission alive when donations slow down? Charity uplifts but it rarely scales Charity has transformed lives in Pakistan. It's part of our national identity, be it Edhi's ambulance network or microfinance revolutions led by Dr. Amjad Saqib. Pakistan remains among the most generous countries by per capita giving. But generosity alone can't replace structure. Charity is powerful but also seasonal, emotional, and inconsistent. It lifts people but doesn't always sustain the system. That's where social business comes in, not to replace charity, but to complement it. Social business looks like any other enterprise selling products, generating revenue, and running operations, but its purpose is to solve a social problem. There are no dividends; profits are reinvested to grow impact. Global examples show us what this can look like: Grameen Danone, producing affordable nutrition for children; Grameen Phone, connecting rural communities through mobile access. For Rizq, this framework crystallized when our CEO and co-founder Qasim Javaid attended the Yunus Social Business Master's Program at AIT Thailand. That experience gave us the vocabulary and perspective for what we had been doing all along: building systems of dignity, not dependence. Rizq Khana is one of the clearest examples of how our work has shifted from charity to sustainable solutions. At its core, Rizq Khana is a network of small food carts that operate to provide fresh, affordable meals every day for communities that often struggle to access quality food. Meals are prepared at our kitchens and sold at prices low enough for anyone to afford but high enough to keep the kitchen running. This simple shift, treating people as customers, not 'beneficiaries', preserves dignity and creates ownership. Each Rizq Khana cart covers its costs, pays its team, and sustains food supply without relying on seasonal donations. In many cases, the people running these carts come from the same neighborhoods they serve, fighting hunger while creating livelihoods. This is social business in practice: a system that feeds people today and stays strong enough to feed them tomorrow. Pakistan faces urgent challenges like malnutrition, climate impacts, and youth unemployment. Philanthropy alone cannot keep pace with the scale of need. But what if young, bright minds didn't have to choose between earning a living and doing good? What if they could do both? We've seen how social business can work. It allowed us to feed people with dignity, create job opportunities, and keep our work running without waiting for the next donation drive. Now, we want more people to be part of this. We're inviting universities, companies, policymakers, and organizations to join us through partnerships and incubators, and bringing this thinking into classrooms and communities. When we raised Pakistan's flag at Social Business Day in Dhaka, it felt like a small beginning. Our people have always had the heart to serve; with this model, we finally have a way to make that service last. Are we ready to lead?
Business Recorder
12 hours ago
- Business Recorder
Pakistan's documented Steel Industryis proud of making Pakistan self-reliantin production of world class steel
Evenin most difficult of situations there is no choicebut to remain hopeful and optimistic in pursuitof good times. This is how challenges could bedefeated and difficulties could be overcome. To achieve success, it is equally important to learn from pastmistakes and not to repeat the same mistakes again and again. Itis very simple, doable as well as an achievable goal for our countrywhich is blessed with abundance of natural resources, unmatchedhuman talent and hard working youth force. Whereas we can identify many weak areas like governancerelated issues, inconsistent policies or failure in implementation ofeven when policies were good. However, there is a broad consensusof all of us on one point – Pakistan is one of the most resilientcountries. In our entire history, we have been making mistakesrepeatedly and doing a lot of experiments, still, this countrycontinues its journey. In some areas we have made remarkable progress like in ourdefence capabilities. In our recent encounter with our arch enemyIndia, Pakistan proved its strength as one of the strongest forces inthe world. After a long time, it was a moment of great pride for eachand every Pakistani when several times bigger adversary was defeatedby the shaheens of our Air Force as well as our armed forces. However, on the economic front, no doubt we are makingsome progress and moving ahead but we are too slow-moving ininches whereas there is need to leapfrog in miles to catchup withrest of the world. Many countries who started their modest economicand industrial journey just like Pakistan decades ago, have overtaken us in economic and industrial progress. We have beenlistening a lot about the fact that South Korea took Pakistan' development plan in early 60s. Today, South Korea is one of theleading industrial countries in the world. Now let's talk about Vietnam and Bangladesh. Even thesecountries are leaving us much behind. This situation merits serioussoul-searching by all of us and especially those at the helm of we went wrong and what needs to be done. These are thequestions which we need to respond and address seriously, if weare willing to change for the better. Now let me focus on the state of affairs of long steel sector: Pakistan's Steel Industry deploys state of theart technology with lowest carbon emissions During the last decade, immense investments were made byleading players of steel sector for enhancement of capacity ofdomestic steel industry. Pakistan China Economic Corridor wasthe biggest charm for the large investors. As a result, manyleading players of Pakistan are far ahead in comparison withregional players in terms of deployment of latest technologiesand in efficiency. Due to investments made in acquiring world-class technologies in recent years by large steel producersof documented sector, Pakistan's steel industry has the lowestemissions. According to recent World Bank report, emissionsintensity of steel production in Pakistan t-CO2/t-steel is farlesser than global benchmark of 2.5 t-CO2/t-steel. Core challenges confronting documentedsteel industry At this point in time, Pakistan steel industry has the capacityto meet the entire domestic demand of steel now as well as infuture. However, right now the industry is working at lessthen 50% of its capacity. During the FY 2021, the import ofscrap to Pakistan was around 5 mln MT which is reduced toalmost 50 % in recent years. This is a direct result of demanddestruction which is the mother of the crisis being faced bythe steel industry. The Govt has taken some good measuresin recent budget, however, much more needs to be done tostimulate housing & construction industry, which will helpnot only the steel industry but it will give new life to over 5 downstream industries. Indeed, this single initiative on thepart of the Govt can help in reviving the entire economy ofthe country. The second biggest challenge facing steel industry ispitching of tax evading informal sector which producessub-standard steel versus those documented & fully compliantplayer who are making payment of all kinds of duties &taxes ethically and produce high quality steel. This situationhas created an unfair competition and has put tax – payingdocumented sector at great disadvantage. So far the Governmenthas not succeeded in taking measures to correct thissituation effectively. As a result, the documented and compliantsteel sector continues to shrink while the informal sectorcontinues to grow. Also, the Government is not givingincentives to fully documented & compliant sector whichindirectly amounts to encouraging the informal economy. Steel is the backbone of any country's economy 'Steel is accorded highest importance world over as it is oneof the basic industries, and it remains one of the most protectedindustries the world over. However, in Pakistan, it remainsas an ignored industry.' These are the remarks of a Chineseinvestor whose company is the first private sector investmentventure from China to Pakistan. Apart from many other factors, the key reason thatdespite its importance for economy the steel industry remainsignored is that in Pakistan there are two types of industrialgroups. Group one comprise of the so-called 'privileged,powerful and successful' industries who get lion's share ofthe Govt subsidies and privileges. Due to power and cloutthis group, it is said, their issues get resolved on a singletelephone call. The Second group comprise of all-of-the-restwho keep struggling for survival but fail to get any supportor importance from the Government machinery. This is thestark reality of Pakistan. If we want our industry to progressthis practice must change so that each and every sector ofeconomy gets equal importance and opportunity to runindustry and to succeed on merit. Substandard steel production and operationsof unregistered mills MUST END! Mostly produced by unregistered mills / informal sector, over50% construction steel sold in our country is substandard and does not conform to Pakistan Standards. This raisesserious questions on the effectiveness of bodies like is in the category of mandatory list and cannot beproduced by unregistered mills. Pakistan falls underearthquake-prone seismic zone and usage of sub standardsteel at such a large scale amounts to creating national riskfor to future generations. Copyright Business Recorder, 2025
Business Recorder
13 hours ago
- Business Recorder
Pakistan says it's close to US trade deal, Washington gives no timeline
WASHINGTON: Pakistani Foreign Minister Ishaq Dar said on Friday the United States and Pakistan were 'very close' to a trade deal that could come within days, but comments from the U.S. after Dar met with Secretary of State Marco Rubio mentioned no timeline. 'I think we are very close to finalizing a deal with US. Our teams have been here in Washington, discussing, having virtual meetings and a committee has been tasked by the prime minister to fine-tune now,' Dar said in a discussion at the Atlantic Council think tank in Washington. 'It's not going to be months, not even weeks, I would say (just) days,' he said. Under US President Donald Trump, Washington has attempted to renegotiate trade agreements with many countries that he threatened with tariffs over what he calls unfair trade relations. Many economists dispute Trump's characterization. The US State Department and Pakistan's foreign ministry, in separate statements after Rubio's meeting with Dar, said the two stressed in their discussion the importance of expanding trade and ties in critical minerals and mining. A post by Rubio on X after the meeting and the State Department's statement mentioned no timeline for finalizing a trade deal. The Pakistan foreign ministry also said Dar 'appreciated the pivotal role' by Trump and Rubio 'in de-escalating tensions between Pakistan and India by facilitating a ceasefire.' The State Department statement did not mention India. Trump has repeatedly taken credit for the India-Pakistan ceasefire he announced on social media on May 10 after Washington held talks with both sides. India disputes Trump's claims that the ceasefire resulted from his intervention and trade threats. India's position is that New Delhi and Islamabad must resolve problems directly with no outside involvement.
