January 09, 2014
Minister for National Food Security and Research Sikandar Hayat Bosan has convened a meeting of tractors and agriculture machinery manufactures on Thursday (today) to finalise recommendations on General Sales Tax (GST), well informed sources told Business Recorder. The government has recently increased GST on agriculture tractors which has affected tractors” production significantly as farmers are said to be unable to buy ”expensive” tractors because the banks, including ZTBL, are not extending loans.
The federal government had reduced GST on tractors (decreasing price by Rs 90,000 per tractor) so that farmers could buy tractors at reasonable rates but the two local tractor companies did not pass on the impact of reduction in GST to the farmers. Last month, both the companies increased prices by five percent under the guise of increase in GST from five percent to 10 percent.
Recently, Pakistan Association of Automotive Parts Accessories Manufacturers (Paapam) warned the government saying that the country”s indigenous tractor industry has almost closed, as one of the major manufacturers Al-Ghazi Tractors has stopped production for the last three months while Millat Tractors Ltd is presently operating at 20 percent of its capacity. This has rendered some 300 + tier 1 suppliers and thousands of workers who work in these factories and down stream industries out of work. The association also claimed that a 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 capacity of producing 80,000 units annually.