SOHAIL SARFRAZ

ISLAMABAD: The government is considering a viable proposal of the fruit juice industry to introduce zero percent or a lower rate of Federal Excise Duty (FED) on a new category of juices(with no added sucrose/ white sugar) in Pakistan, it is learnt.

Budget makers are serious considering the proposal in the upcoming federal budget (2026-27), sources said.

The industry had asked the government to clearly distinguish between fruit beverages and juices sectors from the carbonated drinks category. Delinking these two categories is crucial for strong fruit procurement value chain involving farmers and as a healthy option.

The documented fruit juice industry is ready to invest in and launch a new category that will address this major concern and have no added sucrose or white sugar. This will give consumers another choice by bringing an even healthier option within the fruit juices segment.

Chairman Senate Standing Committee on Finance and Revenue, Senator Saleem Mandviwalla has already endorsed the proposal of the industry for not applying FED on new category of juice (with no added sucrose/ white sugar).

The Fruit Juice Council argued that there had been a 50 percent decline in their sales, so they asked to reduce the Federal Excise Duty (FED) rate from 20 percent to 10 percent and urged that fruit juices should not be clubbed with fizzy drinks for taxation purposes.

The industry had proposed that in the Federal Budget 2026-27, the government should also reduce the FED on existing variants from 20 percent to 10 percent.

The fruit-based juice industry had an annual turnover of about Rs 40 billion in 2025.

With the sudden imposition of 20 percent FED on juices (in addition to 18 percent sales tax) in the Annual Budget 2023-24, industry volumes have plunged – as predicted by the industry by more than 45 percent –closer to the juice industry volumes in 2017. This shrinking business is negatively impacting fruit farmers and pulp processors.

The formal Packaged Juice industry is largely localised. By procuring local fruits, it not just prevents significant food wastage but also protect the farmers’ livelihood. In 2022, the industry procured an estimated 100,000 tons of mangoes, kinnows, apples and guava from local farmers, for conversion into pulp. However, since the imposition of the FED, the volumes have declined by more than 50 percent as compared to 2022 volumes. The current volume is less than the juice industry’s procurement in 2017, a year when the industry was starting to grow.

Fruit-based juices are promoted as a healthier option by Food Authorities. In line with local regulations, fruit drinks have minimum 8 percent fruit content, nectars have 25 percent-50 percent fruit content and pure juices have 100 percent fruit content.

In addition, the high tax is resulting in consumers shifting to low-priced, low-quality and possibly unsafe alternatives offered by the undocumented sector, which is almost 20percent of the industry size. This has also resulted in revenue loss for the government.

The industry understands that one of the government’s main motives behind the high FED was a concern about some variants containing sucrose (white sugar), even though the products meet standards set by food authorities. The formal fruit juice industry is prepared to invest in and launch a new category that will address this major concern and have no added sucrose or white sugar. This will give consumers another choice by bringing an even healthier option within the fruit juices segment.

When contacted, sources said that the Tax Policy Unit of the Finance Ministry is reviewing the said proposals of the industry.