Food sector: PVMA Chairman terms Federal Budget disappointing

KARACHI: Sheikh Umer Rehan, Chairman of the Pakistan Vanaspati Manufacturers Association (PVMA), has termed the Federal Budget 2025-26 disappointing for the food sector, particularly the ghee and cooking oil industry.

Expressing serious concerns, he stated that instead of providing relief, the budget proposes measures that will increase production costs, inevitably leading to higher food inflation.

While appreciating the governments move to abolish the ‘non-filer’ category and broaden the tax net, a long-standing demand of the business community. Sheikh Umer Rehan lamented that the core issues of the edible oil industry have been completely ignored in the budget.

He highlighted that sales tax refunds have been pending for extended periods, causing severe liquidity challenges for the sector. Additionally, Section 8B of the Sales Tax Act imposes an undue financial burden by requiring manufacturers to pay extra taxes. “If the government cannot ensure timely payment of refunds, it should at least abolish Section 8B immediately,” he asserted.

Sheikh Umer also welcomed the removal of Additional Customs Duty (ACD) on imports in the budget but stressed that this benefit must be extended to the ghee and cooking oil sector. This, he argued, would not only provide relief to the struggling industry but also help reduce prices for consumers.

He warned that the edible oil industry is already under immense pressure due to high import taxes, duties on raw materials, and the devaluation of the Pakistani Rupee. Now, with additional levies like the petroleum levy and carbon tax, production costs are set to increase dramatically, making it even harder for the industry to sustain operations.

Sheikh Umer said that government has once again overlooked practical measures to boost domestic production of edible oils and to reduce reliance on expensive imports.

He pointed out structural flaw in the government’s economic planning, stating that the burden of taxation continues to fall disproportionately on the existing formal sector, particularly manufacturers, while the agriculture sector, contributing 25% to the national GDP, remains largely outside the tax net, contributing less than 1% to tax revenues.

Sheikh Umer expressed disappointment that while the tax exemptions for the former FATA/PATA regions have been slightly reduced; they have not been entirely eliminated, leaving local manufacturers at a continued disadvantage. He urged the government to reduce indirect taxes and levies on essential food items, provide relief on raw material imports, and bring the agriculture sector into the tax net to ensure a more equitable tax regime.

He warned that “Without concrete measures to support the edible oil industry, controlling food inflation will remain an unattainable goal.”

Copyright Business Recorder, 2025