Declining volumes: Tractor production falling continuously

Paapam chief seeks incentives for struggling industry

LAHORE: As the 2016-17 budget approaches, the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) has once again raised its concern over the constant decline in the production of tractors in the last five years.

Volumes have come down from over 72,000 in 2010-11 to 45,000 in 2014-15 and are expected to close this financial year below 30,000 units.

Speaking on the dire state of this industry, Paapam Chairman Mumshad Ali said federal ministries of finance, industries and food security, and provincial governments of Punjab and Sindh needed to come on the same page for growth of this vital industry.

“Government policies are inconsistent and non-directional, and the industry goes into a cycle of boom and bust due to this,” said Ali.

Ali continued that the Federal Board of Revenue changed general sales tax five times in the last five years, imposed 30% regulatory duty on steel raw material used by this industry, and wants to allow import of tractors at zero duty.

“Additionally, Sindh provincial government launched its tractor subsidy scheme which was announced in its finance bill only last month - after a delay of 10 months.”

Similarly, Ali said, the Punjab government abruptly withdrew its subsidy scheme of Rs5 billion for 10,000 tractors without any notification. “All these incoherent directives of the government are to blame for the crisis this industry is facing.”

Presenting a solution to the ongoing crisis, Ali suggested that an interest-free loan scheme that ran for five years, on the model of Apna Rozgar, would be an ideal solution for revival of the industry.

“Commercial banks need to raise funds to inject into this market to make tractor purchase affordable for the hard-pressed Pakistani farmers.”

Published in The Express Tribune, May 31^st, 2016.

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