Unshackling the Coffee Industry – A Case for Duty-Free Instant Coffee Imports

Coffee culture in Pakistan is slowly percolating into the mainstream. Cafes dot urban centers, and a new generation of consumers is embracing coffee as part of their daily routine. Yet, despite this growing interest, Pakistan’s coffee industry is struggling to scale. The culprit? Excessively high import duties, particularly on bulk raw material such as instant coffee.

Since the issuance of SRO 840(I)/2021, the import of instant coffee has faced total duties of 28% comprising 15% Regulatory Duty (RD) and 2% Additional Customs Duty (ACD). This is in stark contrast to tea imports, which are taxed at a much lower rate of 13%.

This disparity is more than just a numbers game, it’s a structural barrier. It prevents businesses from importing raw materials cost-effectively and disincentives investment in the local coffee value chain. To create a level playing field, the government must consider removing the RD and ACD on instant coffee imports, particularly for bulk shipments intended for local manufacturing.

A Policy-Aligned Reform

The National Tariff Policy already advocates for the removal of excessive duties on raw materials to promote value addition within the country. In this context, eliminating import duties on instant coffee would align with stated government priorities. It is a reform long overdue and one with significant upside potential.

Unlocking Industry Potential

Removing the duties will reduce costs for coffee importers and local processors. Lower costs mean increased profitability, which encourages more businesses to enter the market and existing ones to scale operations. It also means more affordable retail prices for consumers, helping expand the customer base.

With demand expected to grow steadily over the next decade, especially among urban and younger demographics, this policy shift could transform the coffee sector from a niche market to a major industry.

Stimulating Local Production

Lower input costs can encourage companies to establish local roasting, blending, and packaging operations. This means new factories, more jobs, and better supply chain infrastructure. In the long run, Pakistan could become a hub for regional coffee production—provided the right policy incentives are in place.

Boosting Exports Through Value Addition

Instant coffee is a shelf-stable product with global appeal. By enabling cheaper imports of raw material, Pakistan could develop a competitive edge in exporting value-added coffee products—such as ready-to-drink beverages and specialty blends. This could help diversify the country’s export portfolio and reduce its reliance on traditional sectors.

A Win-Win Proposition

The fear that removing duties may reduce government revenue is short-sighted. As the coffee market expands, so too does the taxable base. Income tax from new businesses, employment taxes from job creation, and sales tax from increased consumer purchases can far outweigh the initial loss from import tariffs.

The case for removing Regulatory and Additional Customs Duties on bulk instant coffee is not just strong, it’s urgent. If Pakistan wishes to foster innovation, attract investment, and build a modern consumer economy, it must start by eliminating outdated barriers like high import duties.
Coffee may be just one product, but the impact of reforming its import structure could echo across industries. It’s time to brew progress one policy decision at a time.