India’s coffee industry has sought a review of the goods and services tax (GST) rates on instant coffee and the curing process, while stating that a high 28 percent tax would hurt consumption and, therefore, realisations by coffee growers.
Coffee growers are under pressure as the volatile trend in global prices, which directly influence local prices, has already kept their realisations in check.
The GST on instant coffee has been fixed at 28 per cent, while the curing or dry processing of the beans attracts a levy of 18 per cent.
The higher tax would bring down instant coffee consumption in the country which would also have a significant impact on the coffee farmers of Karnataka and South India, since instant coffee manufactures will source less raw coffee from them.
Making a case for reduction in GST on instant coffee, The India Coffee Trust (ICT), represented by various stakeholders from the sector, has appealed to the government to bring it down to 18 per cent, on par with the instant tea.
According to the ICT, of the 3.46 lakh tonnes of raw coffee produced in the country, about 2.78 lakh tonnes is exported, while the rest is consumed domestically. Of the 0.78 lakh tonnes consumed domestically, about 50,000 tonnes is used in the form of roast and ground, while the remaining 28,000 tonnes is consumed as instant coffee.
South India accounts for the bulk of the coffee consumption, though off-take has picked up in the northern States in recent years.
Meanwhile, the All India Coffee Curers Association has also demanded the withdrawal of 18 per cent GST levied on coffee curing. Curing involves dry processing and grading of green coffee beans.