Tractor schemes announced in budget for current fiscal year are being delayed to facilitate some new entrants.

Sindh and Punjab announced tractor schemes in finance bills two months ago and it was expected that the schemes would boost tractors production, which has seen a declining trend in the last few years due to GST rate changes, floods, and commodity price crashes, particularly rice, potato and cotton.

However, as the buying season approaches, there is still no news from both the provincial governments i.e. Sindh and Punjab on the timeline for the launch of the schemes, or on the amount of subsidy per tractor and the number of tractor units that will be subsidized.

It is speculated by industry stakeholders that the scheme is being delayed because a Belarus state owned company is all set to step foot in Pakistan and the vested interest may find it an exciting opportunity to make money.

A local farmer said that this is against the government’s manifesto which claims of promoting farm production but actually ruining the same through pitching the tractor industry against subsidized tractor imports from Belarus to be made up and assembled in Pakistan.

The newly-elected chairman of PAAPAM Mumshad Ali said that financial performance and reasonable profits of the existing industry players are the basic attraction for any new entrant in a sound industrial environment, but in Pakistan it is the vested interest of few which attract some unknown manufacturers and give them favors like importing parts at concessional rates, devastatingly impacting not only the OEMs but the small vendors also who have invested heavily from their own resources.

Mumshad Ali said that the local tractor industry faced drop in sales in the last 2 years as the industry has not yet recovered from the 17 percent GST imposed by the government sometime back.

According to him, the local tractor industry has the production capacity of 60,000 units but by stretching shifts it produced over 70,000 units for two years before the imposition of the GST. Currently the sales are around 40,000 units, compelling the industry to lag behind their production targets.

“The local tractor industry is already in hot waters due to decreasing demand and sales but instead of promoting agriculture and usage of technology in the sector to boost the output the government is only damaging the local industry by allowing even more new entrants without building a market for them,’ he added.

“The government is allowing imports of tractors from Belarus, and this would disturb the local industry beyond imagination as 500,000 labour will be affected,’ said Mr Jameel, Director IEP (International Engineers Pakistan).

He added that there are 400 vendors who have spent 40 years to bring 95% localization and now they are being rewarded by allowing Belarusian companies to import tractors in Pakistan.

Jameel said the government’s policies are hampering growth in tractor manufacturing, and it would let the agriculture sector suffer and to make farm mechanization stagnant.