KCCI asks govt to reconsider MRP on imported tea

KARACHI: President of the Karachi Chamber of Commerce & Industry (KCCI) Muhammad Jawed Bilwani has called on the government to withdraw its decision to fix a minimum retail price (MRP) of Rs1,200 per kilogramme for bulk imported black tea.

Bilwani argued that this regulation is unfair and would penalise legitimate importers by forcing them to pay higher taxes. He added that it would also make tea more expensive, particularly impacting the poorer segments of society. Bilwani made these remarks during a meeting with a delegation from the Pakistan Tea Association (PTA). “Setting a flat MRP per kilogramme will disproportionately affect lowest-income groups in both urban and rural areas, equating their financial burden to that of higher-income groups,” Bilwani warned.

He added that the new regulation would further strain lower and lower-middle-class households, which are already grappling with the severe effects of rising inflation on essential commodities.

Bilwani suggested that rather than imposing a flat rate, a more thoughtful approach should be adopted. He explained that fixing the MRP at Rs1,200 per kilogramme would lead to a higher sales tax evaluation, even for tea imported at a low cost of 0.8 cents per kilogramme. This would significantly increase the price of the least expensive tea, making it unaffordable for consumers. Bilwani noted that black tea is currently imported at a cost ranging from 0.8 cents to $4.5 per kilogramme.

He further pointed out that while legitimate importers face increasing hardships due to this measure, exemptions are granted to Fata/Pata regions, where dry port facilities are often misused for tax evasion. Bilwani stressed that this situation needs urgent attention to ensure a level playing field for legitimate tea importers, who have been supplying this essential household product for decades and contributing substantial taxes to the national exchequer.

“It is a matter of grave concern that during the 2023-24 period, 23 million kilogrammes of tea arrived under the Fata/Pata exemption, which ultimately landed in markets across Pakistan,” Bilwani said. “Tea imported under Fata/Pata exemptions is 500 per cent higher than the consumption in these areas, meaning around 20 million kilogrammes of tea from these regions was sent to the rest of Pakistan through other channels, depriving the national exchequer of Rs25 billion annually.”

During the meeting, Chairman of the PTA Muhammad Altaf also expressed his disagreement with the Federal Board of Revenue’s (FBR) decision to impose the Rs1200 per kilogramme MRP. He argued that the decision lacked any rational basis and oversimplified the tea trade, failing to consider its complexities.