KARACHI - Pakistan Automotive Manufactures Association (PAMA) has strongly criticized the proposal of Ministry of National Food Security and Research (MNFS&R) for reportedly working on a proposal of allowing import of completely built unit (CBU) agricultural tractors by reducing customs duty to zero % and termed the move as damaging and devastating for the industry.

PAMA said the ministry may have framed its baseless and typical arguments in support of this proposal but the news has sent a shocking wave across the local tractor and parts manufacturers.

Association’s Director General Abdul Waheed Khan stated that for the last three years, there has been remarkable growth in the auto industry of the county except in  case of agricultural tractors which is now, fifth year running, continued to be in a state of turmoil. During the first nine months for the current fiscal year (9MFY16) it has registered total sale volume of 22169 units which is lowest since last fifteen years. These figures tell us that against a total annual capacity of 91000 units; a mammoth 68% installed capacity in the country is standing idle.

He said that the reasons for so much capacity being idle is actually government’s own making. The government first imposed sales tax at the standard rate. The industry could not sustain the heavy impact of additional 16 % sales tax and toppled, under its impact, to 48120 units in year 2012 from 70770 units, in 2011. The government later on took measures to control the damage by way reducing the rate, which did halt further loss in production, but hardly helped to revive the industry back on track, as yet. For the current year, the government announced subsidy schemes in an effort to bolster the production but those schemes yet to see light of day and may have been shelved as there is no time left now for the year.

The DG further said that local tractor industry is the premier industry of the country by all counts. It has achieved 92% localization which is why, even though European and American brand names; they are cheapest in the world, even cheaper than china, by a big margin. Lately, local industry have found market overseas, including Europe, for export of CBUs and parts and it is poised to join global value chain. It is ironic that while so much we have of our own yet the government is looking to benefit foreign companies.

‘The MNFS&R’s proposal would be catastrophic for tractor industry which is already in turmoil; imperiling thousands of jobs and huge foreign and local investments’; said the DG.

‘The negligence of successive governments towards farm mechanization has been disastrous for the country and its agriculture. It is beyond logic to vouch for zero import duty on tractors and not the farm machinery used for tilling, seed sowing and harvesting as well as storage and irrigation, which should have been made tax free,’ he added.