LAHORE: The Lahore Chamber of Commerce & Industry hasexpressed a grave concern over the closure of Millat Tractors Manufacturing unit and has once again raised the issue of the tractor industry with the government and called for its early solution for the sake of economy.
The LCCI President Engineer Sohail Lashari, Senior Vice President Mian Tariq Misbah and Vice President Kashif Anwar were talking to a delegation of PAAPAM led by Chairman Usman Malik and accompanied by Tariq Nazir, Agha Qasim Raza, Nabeel Hashmi and Mumshad Ali.
The PAAPAM Chairman apprized the LCCI office-bearers of the current situation of the tractor industry. This industry prides itself for indigenously producing the cheapest tractor in the world, however is facing severe crisis for the last 2 years with erratic and low demand.
The industry is currently running at 30% of its installed capacity. He said that the government’s decision to raise the GST level to 16% in the new year has led to a crash in the tractor market. This has forced Millat Tractors to close its plant indefinitely with Al-Ghazi Tractors to follow the suite next week. The smaller tractor plants are already closed for that last many months due to low demand.
Despite being the cheapest tractors in the world due to 95% local content, the tractor assembly units are finding it hard to sell their products. Low demand is attributed to low buying power of the Pakistani farmer which was catered for in the past through 0% GST rate along with tractor subsidy schemes, namely Green tractor scheme, Sindh tractor Scheme, and Benazir Tractor Scheme. The confusion over SRO 896 issued on October 4, 2013, which has levied 2 per cent additional GST on auto parts is also forcing the assemblers to increase their tractor prices further, along with approaching the courts for relief.
This year is off with a bad start for the tractor assemblers, part manufacturers and thousands of people employed in this industry. Industry experts say that government revenue will see a sharp drop in the 2nd half of the current financial year, as 100s of tax paying units close down.
The PAAPAM Chairman said that the solution lies in launching a national tractor scheme that aims to utilize the idle capacity of the tractor plants. Current tractor shortages are estimated to be around 800,000 units. If the government can support the farmer with aRs100,000 grant per tractor for 100,000 units per annum, it will need Rs10 Billion annually. Not a big amount for the Government when compared with the expected growth in economy, employment and agriculture.