PSMA urges govt to reduce ‘significantly higher’ sugarcane development cess

LAHORE: Pakistan Sugar Mills Association (PSMA) has urged the Punjab government to reduce the Sugarcane Development Cess (SDC) and bring it at par with other provinces, stating that the existing levy is inflating production costs and deepening financial losses for the industry.

The association noted that the Sugarcane Development Cess has been in force in Punjab since 1964 and is imposed on sugarcane during every crushing season. The cess is directly factored into the cost of sugar production.

In a statement, a PSMA spokesperson said the cess is collected equally from sugar mills and growers on sugarcane supplied to mills. Under the law, the proceeds are meant to be utilised for construction and maintenance of roads from farms to mills, bridge construction, and research and promotion of the sugarcane crop.

However, sugar mills continue to receive complaints from growers that the cess in Punjab is significantly higher compared to other provinces, while district governments allegedly fail to utilise the collected funds for the intended purposes. As a result, farm-to-mill roads in many areas remain in a dilapidated condition, causing operational inefficiencies and additional costs, the statement added.

The association also pointed out that Pakistan has one of the highest tax burdens on sugar globally. Sales tax on sugar in Pakistan stands at 18 percent, compared with 5 percent in India, 7 percent in Thailand, and 13 percent in China.

PSMA said the cost of sugar production has increased sharply in recent years, while sugar prices remain below production cost, pushing mills into sustained losses. Factors contributing to the rising cost include heavy taxation, expensive imported chemicals, high interest rates, and increases in minimum wages. The association stressed that the Sugarcane Development Cess in Sindh and Khyber Pakhtunkhwa is significantly lower than in Punjab, and called on the provincial government to rationalise the levy and align it with other provinces to provide relief to both growers and mills.

Copyright Business Recorder, 2026