LAHORE  - Only 30,000 tractors are expected to produce in fiscal year 2013-14 as the industry had been operating at half of its capacity for a long time due to multiple reasons including inconsistent policies of the government and week purchase power of growers.

“After a short surge in demand in the month of December last in anticipation of GST rise from January 1, 2014, the current financial year will close with tractor production barely touching 30,000 units.” The auto industry representatives said that in previous years, the farmers were supported by 0% GST regime for tractors, along with provincial and federal tractor subsidy schemes and Zarai Taraqiati Bank (ZTBL) loaning. “In the absence of such measures in the current year, tractor industry will be operating below 50% capacity, meaning a rise in unemployment and drop in government revenue collected from this industry which includes 300 plus auto part units across the country. The gains made in revenue collection in the form of GST from the farmers will be annulled by revenue drop due to low tractor production from the tractor industry. They said that the FBR will collect over Rs100,000 on a 50 hp tractor, and over Rs170,000 from a 85 hp tractor.  This tax is to be borne by the farmer.

The Pakistan Association of Automotive Parts and Accessories Association chairman Usman Malik in a meeting with the LCCI president Sohail Lashari said that tractor production touched 70,000 units mark in 2010-11 and then declined to 50,000 units in 2011-12, with this year expected to close with 30,000 units sale. This decline is attributed to decline in support from the government to the farming sector and tractor industry. Pakistan still lags behind India in farm mechanization level and 700,000 more tractors are required to match HP/Hctr of India.

The chairman Usman Malik met with him along with delegation ofled by its Chairman Usman Aslam Malik and comprised Mumshad Ali, Tariq Nazir and Nabeel Hashmi said that he feared a drastic cut in tractors production in the wake a sharp rise in General Sales Tax and urged the government to bring it down to 10 per cent in the larger interests of the agriculture economy of the country.

He said that the raise in GST on tractors would also challenge the food security of the country therefore it needs to be brought down to the previous level of 10 per cent without any further delay and for the sake of inflation hit masses.

He also apprehended a severe blow to the domestic tractor industry because the high cost of local tractors would force the farming community to import tractors.

He said that it was very unfortunate that despite that fact that Pakistani tractors are the cheapest in the world due to 95 per cent local components, but still out of reach Pakistani farmers.

He said that the tractor industry and agriculture hold huge export potential for the country and if the right long-term policies, evolved in consultation with the stake-holders, were put in place then these two sectors could be a source of huge export earnings for Pakistan.