Tractor industry demands incentives

COVID-19 has multiplied problems for manufacturers

LAHORE: The tractor industry of Pakistan, which is on the verge of collapse, has sought stimulus from Prime Minister Imran Khan for revival of the segment.

Industry stakeholders claimed although tractor manufacturers had been allowed to resume production, they could not function unless a proper notification was issued, which would allow allied vendors and traders to produce and transport components.

In a statement, Al-Ghazi Tractors CEO Mohammad Shahid Hussain said even before the Covid-19 pandemic, tractor assemblers were fighting for survival and now their problems had multiplied.

“Tractor manufacturers are only asking for expeditious and urgent release of their genuine sales tax refunds, which have been pending for a long time,” he pointed out. “Immediate release of refunds will improve cash flow of the industry and will also impact its value chain positively.”

He added that tractor production had stalled ever since the lockdown was imposed while production in 2020 to date had dropped at least 23-24%. Moreover, he added, under the current scenario, it would be a necessary step by the government to withdraw the additional sales tax, which was imposed recently.

“In case refunds are not released, tractor assemblers will need additional financing to fund their vendors during the financial crunch, which will certainly add to the cost of operation,” he regretted.

He was of the view that the downturn in the tractor segment was the most severe compared to other industries.

The CEO emphasised that the slowdown was having a trickle-down impact on the agriculture sector. “Tractor is perhaps the only equipment which helps farmers in mechanisation and in improving crop yields,” he said.

He recalled that the vendor base, developed over the past three decades, had facilitated the country in producing up to 90% of tractor parts locally. “This vendor base can only survive if assemblers continue to produce and sell their units,” he emphasised. 

Published in The Express Tribune, April 7^th, 2020.

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