The Pakistan Sugar Mills Association (PSMA) has called on the Punjab government to align the Sugarcane Development Cess (SDC) rate with other provinces, citing the growing financial challenges faced by local sugar mills.
The SDC, which has been in effect in Punjab since 1964, is imposed annually during the sugarcane crushing season. It is collected equally from both sugar mills and farmers and is intended for infrastructure development, including road repairs from sugarcane fields to mills, bridge construction, and support for sugarcane research and promotion.
However, the PSMA raised concerns that the cess rate in Punjab is significantly higher than in other provinces, particularly Sindh and Khyber Pakhtunkhwa. The association’s spokesperson noted that while the tax is meant to benefit the agricultural infrastructure, district governments are not utilizing the funds effectively, and the condition of farm-to-mill roads remains poor.
The PSMA also pointed out the already high production costs due to taxes, such as the 18% sales tax on sugar, which is much higher than the tax rates in countries like India (5%), Thailand (7%), and China (13%). In addition, rising costs related to expensive imported chemicals, high interest rates, and increasing minimum wages are further burdening sugar mills.
The industry is seeking a reduction in the SDC rate in Punjab, from Rs 5, to match the rates in other provinces, in order to ease the financial strain on sugar producers and promote a more competitive market.
