The Pakistan Sugar Mills Association (PSMA) has warned that soaring production costs, driven by significantly higher taxes compared to India, are placing severe financial pressure on the country’s sugar industry.
The association highlighted that sugar mills are already grappling with high production costs driven by heavy taxation, including an 18% sales tax on sugar—significantly higher than rates in India at 5%, Thailand at 7%, and China at 13%. The association added that escalating expenses for imported chemicals, elevated interest rates, and rising minimum wages are further intensifying pressure on the industry.
PSMA has also urged the Pakistan’s Punjab government to bring the Sugarcane Development Cess (SDC) in line with rates charged in other provinces, highlighting mounting financial pressures on sugar mills operating in the province.
The SDC has been levied in Punjab since 1964 and is collected annually during the sugarcane crushing season. The charge is shared equally between sugar mills and farmers and is meant to fund infrastructure projects such as repairing roads linking farms to mills, building bridges, and supporting sugarcane research and development initiatives.
The association, however, expressed concern that Punjab’s SDC rate is considerably higher than those in Sindh and Khyber Pakhtunkhwa. A PSMA spokesperson said that despite the cess being intended to improve agricultural infrastructure, district administrations have failed to utilize the funds properly, leaving farm-to-mill roads in poor condition.
To ease the financial burden and help create a more competitive industry, the association has called for a reduction in Punjab’s SDC rate from Rs 5 to levels comparable with those in other provinces.
