Tea Association raises serious concern over misuse of import quotas

KARACHI: The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has raised serious concerns over the misuse of import quotas, duty drawbacks, and re-export privileges in the tea trade, resulting in billions of rupees in revenue losses to the national exchequer.Aman Pracha, Vice President of FPCCI, issued a stark warning here in a Press conference on Tuesday. He urged immediate reforms to protect small businesses and ensure fair taxation.

Aman Pracha highlighted the misuse of exemptions, former FATA/PATA import quotas and duty concessions meant for regional development are being exploited, enabling large-scale importers to evade taxes. Pracha emphasized, “The misuse of these exemptions has cost the government an estimated Rs. 40 billion in revenue losses this year alone.” He said the unjust tax burden on small and medium enterprises (SMEs) are collapsing due to unfair tax practices. While tea is imported at Rs. 800–900 per kg, taxes are levied at Rs. 1,200 per kg. Pracha stated, “This disparity is crushing small traders who cannot compete with illicit tactics used by powerful players.

”Sharp decline in Legal Tea Imports have plummeted by 17.5%, as 71,000 tons of tea have already been imported under dubious exemptions. “The government must eliminate all special quotas and enforce uniform taxation for all,” demanded Pracha.

The Rs. 1,200 per kg Minimum Retail Price (MRP) directive has exacerbated the crisis. Pracha urged its withdrawal, arguing, “Taxes should align with actual import values, not arbitrary benchmarks.” Tea is being wrongly classified as a “finished product,” attracting higher duties. Aman Pracha clarified, “Tea is a raw material requiring blending, processing, and packaging. It must be categorized as a food item to reduce the 70% cumulative tax burden on imports.

”Pakistan Tea Association leadership has demanded immediate revocation of all special exemptions and quotas. Uniform tax policies for all importers. They also demanded Reclassification of tea as a food item, not a finished product. Withdrawal of the Rs. 1,200/kg MRP policy. Protection for SMEs from predatory practices. Aman Pracha’s Warned that “if these reforms are ignored, SMEs will shut down, smuggling will rise, and the government will lose billions more. We cannot let a handful of exploiters jeopardize Pakistan’s economy and fair trade.” Association leaders among Talha Saleem, Zeeshan Paracha, M Khalil Paracha and others demanded urgent need for policy reform to safeguard revenue, support SMEs, and ensure a level playing field in Pakistan’s tea industry.