The familiar cup of coffee from vending machines at cafes, office pantries, and commercial beverage counters across India might soon become more expensive for consumers. This potential price increase stems from the Union Budget 2026-27, which has withdrawn existing customs duty concessions on imported coffee roasting, brewing, and vending machinery.
Understanding the Duty Change and Its Financial Impact
Industry experts have clarified the mechanics of this fiscal adjustment. The basic customs duty on these specialized coffee machines stands at 10%. Previously, with an applicable exemption, the effective duty rate was approximately 7.5%. The Budget's withdrawal of this concession results in a net increase of roughly 2.5 percentage points, bringing the duty back to the full 10% rate.
Currency Depreciation Adds to Cost Pressures
However, equipment importers highlight that the duty change is not the sole factor. A significant additional pressure point is the recent depreciation of the Indian rupee against the US dollar. Abhinav Mathur, founder of Kaapi Machines, explained, "The bigger impact has come this year from the rupee’s depreciation against the dollar." This currency fluctuation makes importing machinery more expensive in rupee terms, compounding the effect of the restored customs duty.
How This Affects Cafe Economics and Consumer Prices
The increased cost of machinery is a critical component of the overall cost structure for coffee outlets. M G Kaveri, who runs a cafe in Bengaluru, provided insight into the operational challenges. "Machines are a big part of the cost structure...it affects per-cup economics. We will try to absorb as much as possible, but some part may eventually reach the menu," Kaveri stated. This sentiment suggests that while businesses will attempt to mitigate the impact, a portion of these elevated costs is likely to be passed on to consumers, leading to higher prices for coffee served through these machines.
Premium and Branded Chains Face Heightened Pressure
The impact may be felt more acutely by premium and branded coffee chains. These establishments often rely on highly specialized, sophisticated equipment that not only carries a higher import price tag but also requires periodic servicing and maintenance, which can involve additional imported parts or technical expertise. The combined effect of the duty hike and rupee depreciation could squeeze their margins more significantly than smaller, local operations.
This budgetary move occurs amidst broader discussions on the Union Budget 2026-27, which has outlined various changes in taxation and duties, affecting a range of goods and services. The withdrawal of concessions on coffee machinery underscores the government's fiscal adjustments and their potential ripple effects on everyday consumer expenses in the food and beverage sector.
