ISLAMABAD: The Pakistan Dairy Association (PDA) has warned that the continuation of heavy taxation on milk and milk products is not only inflating prices for consumers but also hampering the industry`s export potential.

The association described the 18pc sales tax, imposed in the federal budget for 2024-25 and retained for the next fiscal year, as an `existential threat` to the formal dairy sector.

Addressing a press conference on Tuesday, representatives from Friesland Campina, Tetra Pak, and Nestlé Pakistan stressed that milk is widely recognised as an essentialfood item and is either exempted from tax or minimally taxed in over 100 countries.

PDA Chairman Usman Zaheer Ahmad said that the combination of high taxation and escalating operational costs had caused a sharp drop in packaged milk sales.

`Households are directly affected, with the price of packaged milk rising from Rs280 to Rs350 per litre making it the most expensive staple in many homes,` he said, adding that demand has fallen by over 20pc, further complicating efforts to expand exports.

Imran Husain, Deputy Managing Director at Friesland Campina, said dwindling domestic sales were undermining the viability of exports.

The PDA has proposed slashing the GST on packaged milk from 18pc to 5pc and introducing a 2pc tax on retailers selling unregulated, open milk to address both fiscal and health concerns.