The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has raised serious concerns over the Green Tractor Scheme, warning that it is destabilising the tractor parts industry, disrupting cash flows, and putting thousands of jobs at risk.
PAAPAM Chairman Usman Aslam Malik underscored the sector's importance, noting that over 250 small and medium engineering units in Punjab employ more than 35,000 skilled workers directly and over 300,000 indirectly. Local manufacturers supply over 900 of the 1,000-plus components required for tractor assembly, playing a crucial role in Pakistan's agro-economy. However, the subsidy model has caused industry volumes to plummet, with tractor sales reaching a decade-low.
Announced in May and launched in October, the scheme failed to align with the natural sales cycle of tractors. Farmers delayed purchases, anticipating a Rs1 million subsidy per unit, severely affecting sales during the Kharif season. The government's decision to reduce the scheme's scale from 30,000 to 10,000 tractors further destabilised the market, while delays in fund disbursement to assemblers worsened cash flow challenges. Uncertainty over future subsidies has made farmers hesitant to buy tractors, impacting ongoing sales.
Malik criticised short-term, politically driven subsidies for causing more harm than good.
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