Pakistan's tractor industry expected to close current financial year with less than 30,000 units, which would show about 70% drop in revenues, mainly due to high rate of general sales tax

Nevin Barich

PAKISTAN , December 10, 2013 (Business Recorder) – With installed capacity of 100,000 units per annum, the country's tractor industry is expected to close the current financial year with less than 30,000 units, which would show about 70 percent drop in revenues from this industry in the FY 2013-14, mainly due to high rate of General Sales Tax (GST).

Agriculturists are of the view that Pakistan currently needs 800,000 more tractors to match India in per hectare tractor population. They said the government needs to immediately slash GST on tractors to bring tractor rates in the reach of small land-holders so as to move forward in farm mechanisation and maximising per acre yield. Despite producing the cheapest tractor in the world, the Pakistani farmers are still not able to afford tractors.

It may be noted that the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) had also sought the help of Lahore Chamber of Commerce and Industry (LCCI) for the revival of dying tractor industry.

LCCI Acting President Mian Tariq Misbah has called for withdrawal of decision to raise rate of GST on tractor industry as increase from existing rate of 10 percent to 17 percent from January 1, 2014 would hit the entire agriculture sector hard besides rendering thousands of skilled workers jobless.

Tariq Misbah said the tractor assemblers and their 300 plus vendors fear a severe drop in sales as a result of massive hike in GST from January 1.

He said that 17 percent GST to be paid by the country's farmers will further curtail their ability to purchase tractors. With no subsidies on tractors in the current federal and provincial budgets, meagre loaning by ZTBL in the absence of a Federal Agricultural Ministry (thanks to the 18th amendment) and GST set to go to 17 per cent under IMF pressure, will all add up to massive drop in tractor sales, he added.

The LCCI Acting President said Pakistan lags far behind India in crop yield, crop intensity and number of tractors per hectare. He said that drop in tractor sales means unemployment for thousands of skilled workers who work in hundreds of factories producing tractor parts for the tractor assembly plants.

Employment in rural Pakistan will also be curtailed, as tractor is a major source of employment generation in the form of drivers, mechanics, and spares/lub suppliers etc, he added.

The LCCI Acting President said that an industry that had crossed 70,000 units production for two consecutive years i.e., 2009-10, 2010-11, is bracing for below 30,000 units production this year.

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