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Tractor sector shuts down for 2nd time in 2 years.

Lahore -- The country's indigenous tractor industry has almost closed, as one of the major manufacturer Al-Ghazi Tractors has stopped its production for the last three months while Millat Tractors Ltd is presently operating at 20% of its total production capacity. This has rendered some 300 + tier 1 suppliers and thousands of workers who work in these factories and downstream industries out of work.

PAAPAM chairman Usman Aslam Malik stated that rest of the small tractor assemblers have also suspended their production, as new orders are not arriving from the cashstarved and flood hit farmers of the country. Due to high tractor prices this basic tool of agriculture is no longer within reach of even the large land holding farmers and there has been no support both at federal and provincial level in the new government setup.

He said that lack of farm mechanization policy at federal and provincial level, high level of taxation on tractors as compared to the regional counties, high inflation, floods, devaluation of Rupee, and unprecedented hike in utility tariffs have dragged down the sale of tractors, leading to dead level production despite having capacity of producing 80,000 units annually.

He said tractor manufacturers have suspended procurement of parts from their vendors as there are already several thousand unsold tractors dumped at their plants and countrywide dealership network. Tractor prices surged by Rs.100,000 to Rs. 200,000 a unit depending on engine horse power after imposition of 11 per cent GST, plunging the industry in turmoil and endangering investment of billions of rupees.

Thousands of auto parts manufacturing units which provide 92 percent parts to the tractor industry are laying off their 0.5 million workers after closure of tractor manufacturing units. While Pakistan is constantly showing negative year on year tractor sale trend, producing 48,000 units last year against 80,000 units in 2010-11, neighbouring India has registered 7 percent jump in sale of tractors by manufacturing 632,279 units in the current fiscal year, as levies by the Indian government has never exceeded the 5-8 per cent figure, with consistent and massive subsidies to the Agri sector.

The high GST rate, lack of subsidies, and lack of soft term finance to the farmer has dealt a severe blow to this once flourishing industry, which was truly a flagship of Pakistan s engineering prowess with global exports of tractor parts and CBUs.

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Geographic Code:9PAKI
Date:Nov 30, 2013
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