Country's tractor industry is on the verge of collapse after imposition of General Sales Tax (GST) and squeezing of loans by the Zarai Taraqiati Bank Limited (ZTBL), especially to farmers who own less than 12 acres of land, well-informed sources told Business Recorder here on Monday.
"Following the imposition of sales tax, tractors sales have gone down to such an extent that two leading tractor manufacturers, M/s Millat Tractors Limited and M/s Al-Ghazi Tractors Limited have closed down their plants," the sources added. According to sources, local tractor manufacturers produce about 5000-6000 tractors monthly but it is feared that production for July will almost be zero.
Tractor sale in the country began slowing when 17 per cent sales tax was imposed through an Ordinance in March. Farmers who had booked tractors in February and March were massively hit when sales tax was suddenly imposed forcing them to pay an additional amount ranging from Rs 75000 to Rs 150,000 per tractor. Those who had already booked their tractors had no choice but to pay the additional amount in cash, the sources continued.
However, further booking of tractors started falling as a result that both tractor manufacturers have run out of orders and been forced to close their plants. Information collected by this scribe also reveals that around 4000 tractors are dumped in the market because of no buyer. "Since ZTBL has almost suspended credit to farmers for purchase of tractors for over a year and commercial banks are also short of funds for tractor loans, tractors are being purchased only by those who pay net cash," said local manufacturers and a Karachi-based importer of Belarus tractors, Shahzad Shaikh.
Now the prices of cotton have suddenly fallen to a new low, farmers do not have cash to buy tractors. Closure of two plants means thousands of workers getting unemployed as well as closure of the vendor industry supply by 90 per cent. When contacted, representatives of both the local tractors manufacturer companies confirmed that the manufacturing has almost at the dead level, as new orders are not being received.