The tractor manufacturing sector is currently in the doldrums due to the imposition of heavy taxes and high energy rates.

Talking to WealthPK, former vice president of Faisalabad Chamber of Commerce and Industry (FCCI) Engineer Ahmad Hassan said Pakistani farmers were ensuring food for millions of people but their problems were being exacerbated by the flawed policies.

He said the future of Pakistan was inextricably linked to the agriculture sector, but those at the helm were turning a blind eye to the pressing issues facing the farming community.
Recently, a leading tractor manufacturing unit halted its production due to the unfriendly policies, which will have far-reaching negative repercussions for the agriculture sector. The rates of tractors will soar, rendering the farmers unable to cultivate their lands efficiently.

“Our hardworking farming community tirelessly offers food for countless people and contributes significantly to the economy but, ironically, they are facing problems in getting their issues resolved,” he said. As many as 90% of farmers in Pakistan are illiterate and possess small landholdings, but due to their relentless efforts, agriculture contributes 24% to the national GDP. Besides, most of them are not aware of the taxation system.

He said without ascertaining the ground realities, the government enhanced tax on the tractor manufacturers who previously absorbed these costs from their profits. The current situation has made it difficult for them to shoulder this additional tax burden, Hassan added. 

“How can we make Pakistan the food basket of South Asia when we fail to provide a level playing field to our farmers and allied industries? If the industrial units cease production, we will face massive unemployment,” he warned.

He pointed out that the government had imposed 10% sales tax on the tractor parts, which unilaterally increased to 18%.

“This sudden hike in taxes has forced a big manufacturing unit to shut down operations,” he said, warning that this situation will adversely hit agricultural production in near future. The farmers will have to pay heavy prices for new tractors and their parts; without tractors, they will not be able to prepare their lands efficiently, he added. 

Muhammad Nazeer, a tractor dealer, told WealthPK that the tractor sector trade was worse due to the indifferent attitude of the government. He said the policymakers were only focusing on tax collection but nobody seemed ready to provide a level playing field to the business community.
He questioned how the policymakers would collect taxes and meet daily expenses when the businessmen were facing a tough time.

“We have been raising the alarm for a couple of months that the tractor industry is on the brink of collapse, requiring business-friendly policies. Unfortunately, nobody heeded our issues, resulting in the closure of some production units,” he said.

He said a severe cash flow crisis also emerged owing to the withheld GST refunds by the Federal Board of Revenue (FBR). This crisis has also created a plethora of problems for the tractor manufacturing sector. 

The manufacturers, business owners, and labourers in this industry are grappling with a financial crisis, and there are currently no measures in sight to help lift the sector out of this predicament, he added.
Hassan, the FCCI ex-vice president, urged the government to announce incentives for the tractor manufacturing units so that farmers could easily buy tractors and parts.