Fruit Juice Council Demands Removal of 20% FED in Budget

Fruit Juice Council Demands Removal of 20% FED in Budget

Karachi, May 23, 2024 – The Fruit Juice Council (FJC) has urgently appealed to the Federal Board of Revenue (FBR) for the elimination of the 20% Federal Excise Duty (FED) in the forthcoming budget for 2024-25.

The council’s plea is rooted in the adverse impacts the high FED, coupled with an 18% sales tax, has had on the industry’s sales and the resultant decline in sales tax revenue.

In a detailed missive to the FBR Chairman, the FJC highlighted the detrimental effects of the 20% FED introduced in the previous budget. The letter underscored that the exorbitant excise duty, in conjunction with the already significant sales tax, has severely affected the formal juice industry’s sales, triggering a cascade of economic setbacks.

The FJC, an assembly of major industry players including CitroPak, Haleeb, Nestle, PepsiCo, Popular, Shezan, and TetraPak, emphasized the pivotal role of the formal packaged juice industry in providing safe, nutritious fruit-based beverages to consumers. This sector, boasting an annual turnover of approximately Rs 60 billion in 2022 and employing over 10,000 individuals, has seen its fortunes wane precipitously due to the FED.

According to the council, the imposition of the 20% FED in the 2023-24 budget precipitated a dramatic 41% drop in industry sales. Projections for the 2022-23 fiscal year had anticipated sales exceeding Rs 71 billion, but the actual figures plummeted to around Rs 49 billion. This downturn has stymied the industry’s ability to fully utilize its production capacity and has quashed prospects for new investments in 2023-24 and 2024-25.

The FJC warned that the shrinking business size is not just a concern for the juice manufacturers. The downturn has far-reaching repercussions, including reduced sales tax revenues, job losses, and negative impacts on the allied sectors such as fruit farming and pulp processing. The council highlighted that the formal juice industry plays a crucial role in preventing food wastage and supporting farmers’ livelihoods. By procuring significant quantities of fruits like mangoes, kinnows, apples, and guavas—an estimated 100,000 tons in 2022—the industry aids farmers in adopting best practices, thereby uplifting their economic conditions.

However, since the imposition of the FED, the volume of fruits procured by the industry has halved, exacerbating the plight of farmers and further straining the industry. The FJC’s plea for the removal of the 20% FED is thus not only a bid to revive the juice industry’s sales and growth but also an urgent call to mitigate the broader economic fallout affecting the entire supply chain, from farmers to processors and beyond.

As the government prepares the budget for 2024-25, the FJC’s recommendations underscore the need for policies that foster industrial growth, safeguard jobs, and support allied sectors integral to the economy.