Economic Coordination Committee (ECC) Chairman and Finance Minister Ishaq Dar has lashed out at the tractor industry for its lack of response despite getting several incentives.
A number of initiatives had been taken but the tractor industry remained “non-responsive” and now “focus is on approving a policy and settling issues at the implementation stage”, Dar said while approving the import of five-year-old tractors.
In a recent meeting, the ECC deliberated whether to place a quantitative limit on the import of tractors and directed the State Bank of Pakistan (SBP) as well as the ministries and divisions concerned to undertake a review.
It told the Ministry of Commerce to look into the import of tractors under the Kissan Package 2022, in consultation with the SBP, after the import of 20,000 tractors. The ministry will submit a report for ECC’s consideration.
Secretary of the Ministry of National Food Security and Research emphasised that the true spirit of the Kissan Package was to encourage mechanisation in Pakistan.
It was pointed out that the essential category of tractors up to 25 horsepower engine were not included in the import proposal.
Minister for Planning, Development and Special Initiatives Ahsan Iqbal also called for encouraging the domestic manufacturing of tractors. Moreover, he said, standardisation parameters should be set for imports in the first place.
The Ministry of Commerce informed ECC that in pursuance of the prime minister’s announcement of the Kissan Package, the Ministry of National Food Security had prepared and presented a detailed package for ECC’s approval, which also included a proposal for the import of up to five-year-old tractors with duty reduction.
It pointed out that a relevant summary was approved in November 2022 and subsequently ratified by the cabinet.
However, the ministry said that a committee formed to oversee the implementation of Kissan Package had directed it as well as the Ministry of Industries to “prepare a position paper and workable proposal within 10 days”.
The industries ministry shared its proposal for the import of used and old tractors with depreciation allowance of 1% per month but not exceeding 50% of the value of tractors.
According to the proposal, the date of tractor registration in the country of export will be taken as the date of manufacturing and the Federal Board of Revenue (FBR) will make corresponding changes in the Customs General Order (CGO) for finalisation of the customs value of the imported tractor.
The commerce ministry said that in line with directives of the Cabinet Division, FBR’s comments were sought, which endorsed the proposal but called for maintaining the existing depreciation mechanism of 2% per month and up to a maximum of 60% to facilitate the end-users, ie farmers.
It was pointed out that elaborate criteria (formula) for the determination of age of vehicles and their depreciation had already been provided under the Import Policy Order 2022 and CGO No 14/2005. To reduce the cost of tractors, the depreciation may be allowed at 2% per month with a cap of 60%, as already provided under the CGO.
Similarly, the formula for the determination of age may be adopted, as already provided under the Import Policy Order, with the additional caveat that the same may be supported either by a certificate from the original equipment manufacturer (OEM) or a certificate of first registration or a pre-shipment inspection (PSI) certificate.
The commerce ministry submitted proposals for ECC’s consideration and approval. It suggested that to allow the import of up to five-year-old tractors, an amendment had to be made in the Import Policy Order.
To this effect, a new clause may be added that says “import of agricultural tractors, not older than five years, shall be allowed”.
With regard to the proposal of reduction in duty on the import of second-hand tractors, it was proposed that 2% depreciation per month up to a maximum of 60% in the assessable value may be adopted.
ECC considered a summary submitted by the Ministry of Commerce titled “Import of up to five-year-old tractors with duty reduction under the Kissan Package 2022”, and approved the proposal.
Published in The Express Tribune, January 28th, 2023.
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