Around 300 tractor parts makers shut plants

Closure renders thousands jobless

LAHORE:

A prolonged delay in sales tax refunds has forced tractor industry to suspend operations as at least 300 small and medium enterprises (SMEs) manufacturing tractor parts have shut down, rendering about 100,000 workers jobless.

The industry decried the halt to tax refunds to tractor assemblers by Federal Board of Revenue (FBR), which had been long overdue, citing that the entire industry is now facing a severe liquidity crunch.

In an emergency meeting on Thursday, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) highlighted that the closed industrial units had laid off around 100,000 workers.

A large number of jobless people were also rendered homeless while the closure of Al-Ghazi Tractors and Millat Tractors aggravated the situation, they added.

Paapam Chairman Munir K Bana said that both tractor plants had surplus inventory of completely built-up (CBU) units and parts worth billions of rupees, therefore, they were unable to purchase parts from local SMEs, which led to their closure.

Participants noted that tractor assemblers, facing a drop in bookings and stuck tax refunds, needed cash flow to make payments to parts makers. They added that the situation would cripple the agricultural sector, where low production would result in more wheat import. If tractor sales drop to 3,000 units a month, it will no longer be commercially viable for parts makers to keep their plants running, they cautioned.

Published in The Express Tribune, January 13^th, 2023.

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