Tractor industry faces closure amid lockdowns; PM’s intervention sought

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ISLAMABAD: The tractor industry has urged Prime Minister Imran Khan to take notice of imminent collapse of tractor manufacturers as the entire industry, including its 350 vendors, is currently closed and needs a government stimulus for revival.

The symbolic permission given to the tractor industry to commence production cannot function in isolation unless and until a proper notification allowing its allied vendors and traders to produce and transport components is not given in parallel, industrialists said in a news statement, adding that this is the need of the hour if the government wants to save harvesting and the upcoming sowing season from a total collapse.

Chief Executive Officer of Alghazi Tractors Mohammad Shahid Hussain said tractor assemblers were already fighting for survival even before the coronavirus episode occurred.

“Tractor manufacturers are only asking for expeditious and urgent payout of their genuine sales tax refunds that have been pending to them for long. Immediate refunds would improve the cash flow of the industry and its value chain,” he said.

Hussain further said this is time where a subsidy on tractors for farmers would come handy as the affordability of framers at this junction is highly compromised, adding this is needed if we wish the mechanization process not to come to a halt.

“Tractor production has stalled ever since the lockdown so it’s zero since that time, while year to date (YTD) the industry is down at least around 23-24pc. As for refunds, Alghazi Tractors alone have around Rs700-800 million under claim.”

Moreover, Hussain added, under the current scenario, it would be a necessary step to withdraw additional sales tax that was imposed lately.

“In case refunds are not made, tractor assemblers would need additional financing to fund their vendors during the financial crunch, which certainly would add to the misery and cost of operation”

“The downturn in the tractor sector is most severe compared to other industries as it is not limited to just tractor industry but having a snowball effect on agriculture as well, being perhaps the only equipment that is helping farmers in mechanization to improve crop yield,” the Alghazi Tractors further said.

“The vendor base developed in the last three decades facilitated the country to locally produce up to 90pc of parts used in tractors,” he said, adding that this vending base could survive only if assemblers continue to produce and sell their units.

Almost two and half years of constant decline in the tractor production has largely weakened tractor parts producers and some of them have already closed down with limited chance for revival, eliminating thousands of jobs.

“If the remaining vendors are not looked after it will be a huge tragedy for our agriculture as Pakistan is producing the lowest cost tractors of its type in the world,” said Hussain.

“Since tractor demand is bound to rise, the country would be forced to go for costly imports if the tractor industry is not revived,” he added.

Hussain appealed to the government for immediate release of long overdue sales tax refunds and improve the ST mechanism to avoid this recurring issue, especially in such a crisis.

He further appealed to the federal and the provincial governments to give cash incentives to farmers to buy tractors against bank loans on easy installments so that crop yields may improve and the industry could get back on the survival track.

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