Govt policies affecting tractor sales, PAMA

Karachi: The sales of tractors have declined exponentially on year on year basis, which clearly shows that the tractor industry has succumbed to the wrong policies of the government.

According to the details, total tractor sales in 1st quarter of FY2015-16 stood at 6745 units, down 28 percent from 9363 units during the same period last year.

‘The negative growth is not a good omen for the tractor industry that just came out of GST fiasco. This means it has to go through another crisis just because the policies of the government are not supportive to this industry,’ said Abdul Waheed Khan, Director General Pakistan Automotive Manufacturer’s Association (PAMA).

‘The main reason of the current sharp decline in tractor sales is that the provincial governments of Sindh and Punjab did not initiate their tractor schemes they announced in July. This shows their lack of interest towards the wellbeing of both the farmer and the local tractor industry,’ added Waheed.

‘It is quite unfortunate that this industry, that has achieved more than 90 percent localization, is getting severely hurt by the policies of the government,’ said Mr. Waheed.

He added that there are more than six assemblers in the industry including two major players, who are producing standard tractors with cheapest prices in the world, and no regional country including China and India can compete with them.

‘First the government imposed heavy GST which knocked down this industry, and now they are mulling over allowing import of used tractors in the country. They are not realizing that this strategic industry in our agricultural country cannot survive this kind of adventures,’ reasoned Mr. Waheed.

He further stated that the government could have adopted a rational approach to help this industry fully exploit its export potential. ‘One locally produced tractor is available in $7,000 and the tractor with same quality is available in $13,000 in international market,’ added Waheed.

One example, he added, about the inconsistent policies of the government would suffice in this regard as the government changed the GST regime for the industry five times in last five years. Resultantly, the industry went into tailspin in the year 2011 when and its production volume reduced to almost half and full revival is still not in sight.

Waheed was of the view that tractor business is cyclic, dependent on two main crops. ‘Now the situation is that farmers have held back their buying of tractors anticipating the initiation of provincial subsidized tractor schemes. And both farmers and the industry are suffering due to the indifference of the provincial governments in this regard,’ he mentioned.

He added that the inventories of major tractor manufacturers have also gone up since they were expecting big support from these schemes and they made all the preparations for heavy production. ‘The government should have mercy upon local tractor industry and save it from the plight as other local industries are in, due to the bad policies of the government,’ suggested Waheed.