Tractor industry on verge of shutdown

Official laments stuck tax refunds have caused liquidity crisis for parts makers

Our Correspondent September 21, 2021


The tractor industry is moving towards total shutdown as a majority of units are now running a single shift due to persistent delay in release of sales tax refunds.

In a letter written to Prime Minister Imran Khan and Finance Minister Shaukat Tarin on Monday, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Abdul Rehman Aizaz reiterated the industry’s demand to release Rs6 billion worth of sales tax refunds.

He lamented that the amount had been stuck with the government for the past more than 20 months.

He pointed out that the closure of tractor industry would spell disaster for the agricultural mechanisation efforts, particularly when the country was facing a severe deficit of food commodities. He voiced fear that it could also lead to a steep rise in the import bill.

He noted that the delay in sales tax refunds to the tractor parts manufacturers had triggered a liquidity crisis and it might lead to the suspension of operations over the next few days, which would render millions of direct and indirect workers jobless.

He said that Pakistan spent over $8 billion on the import of edible items in the previous financial year while the food import bill widened by over 50% to $1.47 billion in the first two months of current fiscal year.

He voiced concern that the persistent rise in import bill would inflate the trade deficit further.

“Food imports will increase further in the coming months as the authorities have decided to import an additional 0.6 million tons of sugar and 4 million tons of wheat to build strategic reserves,” he wrote.

“The rise in import bill of food items indicates a shortfall in domestic production, which can be met only through the increase in per-acre yield by implementing farm mechanisation programmes.”

He was of the view that farm mechanisation was not possible if the tractor industry ceased to operate and expressed concern that closure of the industry would bring the agriculture-based economy to a standstill.

Published in The Express Tribune, September 21st, 2021.

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