LAHORE: Lahore Chamber of Commerce and Industry President Sohail Lashari has expressed concerns at the closure of tractor manufacturing units while asking the government to make efforts for the revival of tractor industry. Due to increased rate of sales tax the tractor industry is running at 30 percent of its installed capacity.
He said this while talking to a delegation of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) led by its chairman Usman Malik and accompanied by Tariq Nazir, Agha Qasim Raza, Nabeel Hashmi and Mumshad Ali. LCCI Senior Vice President Mian Tariq Misbah and Vice President Kashif Anwar were also present at the occasion.
PAAPAM Chairman appraised LCCI office-bearers of the current situation of the tractor industry. He said, “This industry prides itself for indigenously producing the cheapest tractors in the world. However, it is facing a severe crisis for two years because of low and erratic demand.”
He said that the government’s decision to raise the GST level to 16 percent in the New Year has led to a crash in the tractor market. This has forced Millat Tractors to close its plant indefinitely, and Al-Ghazi Tractors are to follow suit next week. Smaller tractor plants closed down many months ago due to low demand.
Despite producing the cheapest tractors in the world due to 95 per cent local content, tractor assembly units are finding it hard to sell their products. The confusion over SRO 896 issued on October 4, 2013, which has levied 2 per cent additional GST on auto parts, is also forcing assemblers to increase their tractor prices further.
The New Year is a bad start for the tractor assemblers and parts manufacturers, and for thousands of people employed in this industry. Industry experts say that government revenue will see a sharp drop in the second half of the current financial years, as hundreds of taxpaying units close down. PAAPAM chairman said that the idle capacity of the tractor plants should be utilised for the revival of the industry. Current tractor shortages are estimated to be around 800,000 units.
