Govt urged to abolish 20pc FED on packaged fruit juices

LAHORE: The Fruit Juice Council in a letter to the PML-N President and former Prime Minister Mian Nawaz Sharif has requested his intervention to advise the federal government to recommend abolishment of 20pc Federal Excise Duty (+18 percent GST) on packaged fruit juices in the forthcoming Federal Budget 2024–25.

The Council observed the duty and GST are directly impacting the rural economy of fruit farmers in Pakistan, especially Punjab, the value chain comprising pulping units and fruit juice manufacturers and also threatening US$100 million export potential till 2028.

“We are appealing to PML-N leadership, Mian Nawaz Sharif sahib and Chief Minister Punjab Maryam Nawaz to recommend the abolishment of 20% FED to protect the Punjab’s agricultural sector,” said FJC representative Aatekah Mir Khan in the letter also shared with the media.

“Fruit farmers in Punjab are struggling due to low demand causing fruit wastage, and pulping units are doomed to shut, as the industry has crashed,” she said. “With the sudden imposition of 20% FED on juices (in addition to 18% GST) in the Annual Budget 2023-24, industry volumes plunged by 41%,” she added.

FJC, which includes industry players CitroPak, Haleeb, Nestlé, PepsiCo, Popular, Shezan and TetraPak etc has been playing a vital role in providing safe and healthy fruit-based juices to consumers. FJC members are fully compliant to federal and provincial food authorities and had an annual turnover of about PKR 60 billion in 2022, employing more than 10,000 employees.

“A myopic approach to revenue collection is akin to killing the local juice, pulping and packaging industry as well the fruit farmers associated with it. Eventually, these farmers will be pushed under the poverty line, increasing the burden on the government,” she said.

“The government might have increased its revenue for this year because of the high taxation regime on juices in FY 2023-24, but this revenue will keep on falling in the coming years based on the drastic decline in volumes of the fruit juice industry,” she remarked. “On the other hand, abolishing the FED will result in the government revenue increasing from Year 2,” she added.

The formal packaged juice industry, by procuring fruits is protecting the farmers’ livelihood by procuring mangoes, kinnows and guava mainly from local farmers in Sargodha, Multan, and Rahim Yar Khan, for conversion into pulp, whereas peaches and apples are procured from Skardu and Hunza, GB and Swat, KP.

Copyright Business Recorder, 2024