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LAHORE: Local industrial sector specializing in infant formula and fortified children’s milk powders has voiced strong reservations over the government’s decision to withdraw zero-rating benefits in the proposed 2024-25 budget. This move, they argue, will significantly impact both industry operations and consumer affordability.

In discussions with Business Recorder on Saturday, an industry representative highlighted the adverse effects of the government’s decision. “The imposition of an 18% GST, replacing the previous zero-rating, will burden both the industry and consumers,” the industry sources stated. They emphasized the critical role of these products in addressing malnutrition and childhood stunting, issues that Pakistan continues to grapple with on a significant scale.

Finance Minister Muhammad Aurangzeb, in his budget address, underscored the importance of nutrition during the formative years of a child’s life. However, the industry believes that the sudden imposition of GST on locally produced infant formula and children’s nutrition products contradicts the government’s stated priorities and could exacerbate existing health challenges.

Pakistan currently faces alarming statistics in child malnutrition, with a substantial number of children underweight and stunted, as per the National Nutrition Survey. The local industry asserts that these products, priced approximately 50% lower than imported alternatives, play a crucial role in addressing nutritional deficiencies among the population.

In light of the current economic climate marked by inflation, industry representatives proposed a phased implementation of GST over three years. They suggest an incremental approach starting at 5% in the first year, rising to 10% in the second year, and reaching the full 18% in the third year. This strategy, they argue, will allow businesses and consumers alike to adjust gradually, mitigating the immediate impact on affordability and ensuring continued access to essential nutrients for children.

They said industry is buying 300 million litres of milk from farmers to locally produce infant and young children fortified milk powders. “By adopting this phased approach, we aim to balance revenue generation with safeguarding the health of our children and supporting local industry,” the industry circles commented. They stressed the importance of providing businesses adequate time to adapt while ensuring families can continue to access affordable and nutritious products.

Copyright Business Recorder, 2024

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