The formal packaged juice industry in Pakistan has formally urged the federal government to take immediate action in the upcoming federal budget for fiscal year 2025-26, specifically requesting a significant cut in the Federal Excise Duty (FED) on its products.
The industry is calling for a substantial reduction in the FED, which was controversially introduced in 2023 at a rate of 20 percent, compounded by an existing 18 percent General Sales Tax (GST). According to a spokesperson for the Fruit Juice Council, this combined tax burden is severely impacting the documented sector, leading to serious economic repercussions across the industry and its value chain.
The sector, which had projected sales exceeding Rs72 billion in FY23, has witnessed a drastic 45 percent plunge in sales, dropping to Rs42 billion. This sharp decline has not only stalled industry growth but has also resulted in a considerable shortfall in the government’s own revenue projections for the current fiscal year.
The industry highlights that the “exorbitant” tax burden, effectively pushing the tax component on a single pack of juice to approximately 42 percent of its retail price, has fundamentally impacted consumer affordability. This, the industry claims, has inadvertently fueled an alarming surge in the undocumented sector, which offers cheaper, low-quality, and potentially unsafe alternatives that entirely evade all tax obligations.
The repercussions, according to the industry, extend far beyond just the companies’ bottom lines. The drastic reduction in demand from the formal sector has severely impacted the rural economy, particularly affecting thousands of fruit farmers. At its peak, the formal juice industry reportedly procured over 100,000 tonnes of fruit annually directly from local growers, providing a vital market for their produce.
The formal packaged juice industry hopes that the government will heed their appeal in the forthcoming budget, recognizing the broader economic benefits of supporting the documented sector and ensuring the viability of local fruit agriculture.
