Pakistan Association of Automotive Parts and Accessories Manufactures has raised concern over the collapse of tractor sales resulting in the closure of Millat Tractors, AGTL and 300+ vending industry located in the Lahore and Karachi vicinity and associated with this industry. Currently 10% GST is levied on tractors which amounts to Rs 60,000 - Rs 160,000 and is collected by the government from cash starved farmer on the sale of each tractor.
Talking to Business Recorder on Friday Chairman PAAPAM Mumshad Ali said that tractor is highly localised industry. It is the back bone of the Pakistani Auto Engineering base & contributes towards creating employments (300,000) and contributing Rs 7 - 8 billion in Taxes per annum.
He said tractor volumes have almost halved as compared to last year, this is due to the erosion of the buying power of the farmer owing to the collapse of the commodity prices. The government has not allocated any money for tractors in the 300 Billion Federal Kissan Package moreover the provincial governments of both Punjab and Sindh have also not launched the tractor subsidy schemes they announced in their respective financial budget for 2015-16.
According to Mumshad Ali, 800,000 additional tractors are required on the fields of Pakistan to match the Horse power per hector of India. The Federal government should take FBR, ZTBL into confidence and the provincial governments on board to take urgent steps for resolving these crises. He warned if corrective steps were not taken the 300 vending units of Lahore and Karachi would go towards closure resulting in massive unemployment and loss of precious revenue to the government.
A senior executive of Millat Tractors Ltd said that the agriculture sector has suffered crippling financial set-backs due to 30 per cent reduction in production of cash crop cotton crash of paddy and potato prices etc leaving no disposable money with the farmers to buy agriculture implements like tractors. The tractor and its connected vending industry have made following recommendations for revival of the agriculture and industrial sectors:
(a) Provincial governments of Punjab and Sindh should launch the tractor subsidy announced in their fiancé bills;
(b) Tariff correction;
(C) Remodelling the previous tractor schemes on the current Punjab Green taxi scheme model.
(d) Increase funding of ZTBL for tractors loans
(e) Reduction in mark-up rates by ZTBL
(f) Tractor leasing through commercial Banks
(g) Removal of Regulatory duty and excise duty on tractor parts and raw material so the price of the tractor can be reduced.
(h) Forming of a pre-eminent committee consisting of MOI, FBR, MOFR, PAAPAM, PAMA and farmers association to formulate and monitor national tractorization policy to provide stable growth to this vital industry.