LAHORE - The country’s indigenous tractor industry has almost closed, as one of the major manufacturers Al-Ghazi Tractors has stopped its production for the last three months while Millat Tractors Ltd is presently operating at 20 per cent of its total production capacity. Industry sources stated that rest of the small tractor assemblers have also suspended their production, as new orders are not arriving from the cash-starved and flood hit farmers of the country. Due to high tractor prices this basic tool of agriculture is no longer within reach of even the large land holding farmers and there has been no support both at federal and provincial level in the new government set-up.
They said that lack of farm mechanization policy at federal and provincial level, high level of taxation on tractors as compared to the regional counties, high inflation, floods, devaluation of Rupee, and unprecedented hike in utility tariffs have dragged down the sale of tractors, leading to dead level production despite having capacity of producing 80,000 units annually.
They said tractor manufacturers have suspended procurement of parts from their vendors as there are already several thousand unsold tractors dumped at their plants and countrywide dealership network. Tractor prices surged by Rs.100,000 to Rs200,000 a unit depending on engine horse power after imposition of 11 per cent GST, plunging the industry in turmoil and endangering investment of billions of rupees.
“Thousands of auto parts manufacturing units which provide 92 per cent parts to the tractor industry are laying off their 0.5 million workers after closure of tractor manufacturing units.
While Pakistan is constantly showing negative year on year tractor sale trend, producing 48,000 units last year against 80,000 units in 2010-11, neighbouring India has registered 7 percent jump in sale of tractors by manufacturing 632,279 units in the current fiscal year, as levies by the Indian government has never exceeded the 5-8 per cent figure, with consistent and massive subsidies to the Agri sector.
The high GST rate, lack of subsidies, and lack of soft term finance to the farmer has dealt a severe blow to this once flourishing industry, which was truly a flagship of Pakistan’s engineering prowess with global exports of tractor parts and CBUs, observed PAAPAM newly-elected chairman Usman Malik. He pointed out that due to decline in tractor sales, the government revenue from this highly regulated sector is on the decline also. He suggested to the authorities to launch schemes of soft loans to revive the industry based on total tractor production capacity in the country, which is currently over 80000 units per annum. This will make the tractor affordable for overwhelming majority of small farmers of the country.
He suggested that the Punjab government should provide tractors to the unemployed people instead of taxis as a tractor is a machine that can provide jobs for the rural youth of the country, while at the same time enhance per acre yield of corps, and create jobs for urban youth that work in the 100s of factories producing parts for the tractor assemblers.