Fixing Coffee Tariffs

So, you’ve started drinking coffee lately, haven’t you? Maybe it’s that morning espresso shot, a cup of instant coffee before work, or a caramel latte from your favorite café on the weekend. You’re not alone. You qualify to be amongst the Pakistanis-especially the Gen-Z and urban millennials -who are turning to coffee more than ever before, because it is a reflection of a lifestyle change because coffee is no more an elite indulgence. In fact, who isn’t familiar between ‘chai versus coffee’ debates going on?

From home brews to trendy cafés in Lahore, Karachi, and Islamabad, the coffee culture is brewing fast. But, here’s the bitter truth: coffee is being taxed like it’s a luxury yacht. Yes, you read that right. It’s become a bean vs bureaucracy tiff where coffee market is suffering from a paradox. One would assume that that with rising demand, the government would support local businesses and encourage coffee manufacturing. But no. If you’re a company trying to import bulk instant coffee-the raw material-you’re slapped with a 28% duty. This includes a 15% regulatory duty (RD) and a 2% additional customs duty (ACD).

Compare that to tea-Pakistan’s national beverage-where the total duty is just 13%. That’s less than half. And for finished coffee products? The total duty soars as high as 53% – looks more like an anomaly, but it’s true.

Why This Matters: It’s More Than Just a Price Tag. One might ask, why should one care about what importers are paying? Because its, the consumer, who end up footing the bill.

High duties mean higher prices. Higher prices mean fewer people can afford quality coffee. And fewer sales mean less investment, lower jobs creation, and-ironically-less tax revenue for the government in the long run. It’s not just a business issue. It’s a lost economic opportunity.

Let’s get real. When you make legal business too expensive, smuggling creeps in. That’s exactly what’s happening. Smuggled coffee brands are quietly entering the market, bypassing duties, regulations, and even health and safety checks. This not only hurts legal businesses but also violates SRO 237, which was meant to ensure that all imported food products meet proper labeling and halal certification standards. So, guess who gets rewarded? The informal, untaxed, unregulated players. This isn’t just bad economics. It goes against the government’s own policy.

The National Tariff Policy, in its para 6.3 (iii, iv, and v), clearly recommends gradually reducing tariffs on raw materials and phasing out regulatory duties-especially on inputs used by local manufacturers. So why instant coffee is still treated like a luxury import? Only those at helm of affairs sipping fancy coffee in their fancy cups can tell.

Here’s the kicker: Pakistan’s coffee industry isn’t just about local consumption anymore. Stakeholders are already talking about value-added exports-think ready-to-drink coffee cans, branded instant mixes, and even growing coffee in Potohar region someday. But for that to happen, we need to start with the basics: make raw material cheaper. To better understand the export potential, that Pakistan is missing out right now is that, India is the fifth largest grower of Robusta coffee, and while Pakistan too has similar climatic conditions, but we do not grow coffee beans, since it takes at least five years before a plant starts giving fruit. Large corporations could start growing coffee beans in Pakistan but for that the commodity should be excluded from the list of luxury products with a fair tariff policy. That label needs to go. So does the high tax.

So, what’s the Ask? It’s simple: remove the Regulatory Duty and Additional Customs Duty on bulk imports of instant coffee. Let legal businesses grow. Let investment flow. Let Pakistan tap into the global $100 billion coffee economy. The industry doesn’t need special subsidies or fancy schemes. Just fix the tariff structure. Because what’s brewing in Pakistan right now isn’t just coffee-it’s potential.