Import of used tractors seen ploughing into local industry

LAHORE: The auto parts manufacturers on Wednesday said they were launching a campaign to convince the government to give second thoughts to the decision of allowing import of used tractors as it would not bode well for the local industry, farmers, as well as economy.

“It will be undermine the sector comprising 300 manufacturing units, employing near 50,000 directly, contributing to treasury by paying taxes, and saving foreign exchange by providing import substitution,” Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) said in a statement.

The statement said these deliberations were made during an emergent meeting of the association’s managing committee.

The PAAPAM said on average the industry operated at 75 percent capacity in a 5-year cycle owing to demand fluctuations that were driven by crop yields and market prices.

“The industry showed growth in the last 2 years due to support accorded to farmers by the previous government in the form of fertiliser subsidy and interest-free loans among other measures,” the association said.

In the past 10 years, it said, the industry saw two downturns. “The first was due to imposition of general sales tax (GST) and second owing to a drop in market prices and weather impacts,” the statement said.

The association said the used imported tractors would also not fare well for farmer as there was no way to ensure the quality of those tractors. “Moreover their after sales service will also be a big problem owing to non-availability of trained staff and parts,” the statement said adding their parts would also have to be imported putting further pressure on rupee.

It said even today after-sale tractor parts, manufactured using substandard materials and processes, were being imported from India and other countries by commercial importers at suppressed values under the weight duty regime, and the association had taken this matter up with customs several times but in vain.

“Parts produced in Pakistan are costlier due to high energy and material costs. Imported used tractors would mean after-sales service issues for the farmer, loss of business and closure of tractor part manufacturing units, loss of revenue and flight of foreign exchange,” the association said.