Tractor industry on brink of shutdown

Delay in release of tax refunds sparks challenges for manufacturers

Our Correspondent September 03, 2021


The tractor industry is likely to halt production completely in the coming week owing to a persistent delay in the release of sales tax refunds, said Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Senior Vice President Abdur Razzak Gohar.

In a statement on Thursday, he pointed out that tractor-makers had earlier slashed production substantially.

“Moreover, tractor manufacturers have also suspended orders for the supply of parts by vendors, leaving them in total fiasco,” he said. “As a result, over 250 firms specialising in tractor parts manufacturing and thousands of downstream suppliers have been forced to shut down their industrial operations, rendering millions of people jobless.”

According to Gohar, around 2 million people are associated with this business directly and indirectly.

He appealed to Prime Minister Imran Khan to save the tractor parts suppliers by releasing Rs6 billion in sales tax refunds, which were stuck with the Federal Board of Revenue (FBR) for the past one and a half year.

Gohar pointed out that the tractor parts industry was already operating on marginal profits and was struggling to supply parts to the tractor industry.

Read CCP raids premises of tractor makers

“Tractor vendors have limited financial resources and working capital lines from banks,” he said. “Besides clearing the overdue sales tax refunds at the earliest, the Federal Board of Revenue also needs to ensure that SRO 363(1)/2012 is implemented that binds the government to refund sales tax within three days.”

He asked the PM to intervene and direct the tax authorities to release the refunds at the earliest.

He also called on the leadership to launch an efficient system for disbursing refunds to the auto sector on a regular basis in the minimum possible time.

Published in The Express Tribune, September 3rd, 2021.

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