PAAPAM demands govt action as tractor industry faces crisis

LAHORE: The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) convened an emergency meeting to address the ongoing crisis in the tractor industry, marking the second major setback in the current financial year.

The industry’s first crisis arose from the imposition of a 10 per cent general sales tax (GST) on tractors in the Finance Bill 2024-25. This measure placed the industry back into a refund regime, exacerbating existing refund delays amounting to billions of rupees from previous years. The situation was eventually resolved following the intervention of Federal Industries Minister Rana Tanveer.

However, the industry is now grappling with a second blow due to delays and reductions in the implementation of the Green Tractor Scheme, announced by the Punjab government in its Finance Bill 2024-25. Initially, the scheme promised a Rs1.5 million subsidy per tractor for 30,000 units, but it was later scaled down to Rs1 million for only 9,500 tractors.

Adding to the uncertainty, the cancellation of Punjab’s wheat procurement drive despite earlier commitments has further disrupted the market. Moreover, a poor cotton yield last year and falling rice prices have weakened farmers’ purchasing power, leading to a 50 per cent decline in tractor sales compared to the same period last year.

As FY 2024-25 progresses, market conditions remain bleak. Farmers are reluctant to invest in tractors, anticipating a second phase of the subsidy programme and awaiting clarity on wheat procurement policies. Meanwhile, significant outstanding payments under the Green Tractor Scheme remain unsettled, despite deliveries having been completed two months ago.

The resulting cash flow crisis has forced many tractor parts manufacturing units, primarily Lahore-based SME engineering industries, to halt production due to a severe shortage of orders.

In response to these challenges, Chairperson of PAAPAM Usman Aslam Malik, along with former chairmen Mumshad Ali and Tariq Nazeer, former senior vice chairman Saeed Iqbal, Irfan Qureshi, and the current managing committee, convened to strategise a way forward. The association unanimously agreed to escalate the matter through print and electronic media and to formally appeal to Punjab Chief Minister Maryam Nawaz Sharif and relevant ministries for urgent intervention and clarity on the future of the Punjab-based tractor industry.

PAAPAM calls upon the government to swiftly address these issues and safeguard the livelihoods of thousands dependent on this vital sector.