Local tractor industry facing liquidity crisis

ISLAMABAD: Tractors manufacturers have urged the government to provide loans with single digit interest to farmers for purchasing tractor with thrust on reduction of duties and taxes on import of parts for tractors to revive the industry. They also asked for reduction in GST from 17 percent to 5 percent and timely payment of sales tax refunds to cope with liquidity crisis. They also asked the government to do away with the condition of CNIC while booking of tractors by the customers and dealers.

The representatives of Tractor Industry came up with demand here on Thursday in a meeting with officials of Engineering Development Board (EDB). The meeting was held with the local Tractor Industry with the objective of getting acquainted with prevailing problems and issues being faced by the domestic tractor industry and for formulation of line of action to resolve them.

Participants of the meeting suggested a number of measures to revive the industry which include government to facilitate single digit mark-up on tractor financing to farmers, reduction in duties and taxes on imported parts for tractor, reduction in GST from 17% to 5%, timely release of sales tax refunds by the FBR to facilitate the cash flow management of the industry, and removal of the condition of CNIC while booking of tractors by the customers and dealers.

The meeting was attended by CEO, Infinity Engineering and Convener tractor committee PAAPAM, GM, Millat Tractors Ltd, Director, Sazgar Engineering, Sr. GM, Orient Automotive (Pvt) Ltd, Ex-Chairman PAAPAM, Group Chief Financial Officer & Group Chief Corporate Officer, Pirani Group of Companies, representative of Al-Ghazi Tractors Ltd., CEO EDB and senior officers of EDB.

CEO EDB informed that the government and the EDB-BOM is keen to resolve the problems and issues of the industry in order to enable it to play a leading role in the economic development of the country, become a backbone of engineering industry, and enabling it to contribute towards direct and indirect employment within the country.

He further informed that the government is cognizant of tractor industry problems and would like to put in place long term measures to arrest the declining trend in production and sales. He requested PAAPAM and tractor manufacturers to suggest a line of action that would facilitate the long term growth of the industry.

PAAPAM and tractor manufacturers informed that the farmers are extremely price sensitive; hence any increase in prices due to external factors or imposition of duties or taxes results in severe downturn in purchase of tractor.

Participants of the meeting suggested a number of measures to revive the industry which include government to facilitate single digit mark-up on tractor financing to farmers, reduction in duties and taxes on imported parts for tractor, reduction in GST from 17% to 5%, timely release of sales tax refunds by the FBR to facilitate the cash flow management of the industry, and removal of the condition of CNIC while booking of tractors by the customers and dealers.

They further emphasized that the government may launch long term policy for tractor industry and that EDB may be made the single point of contact within the government rather than they having to deal with multiple government entities.