ISLAMABAD, May 28: The government is considering a proposal to reduce duties and taxes on import of tractors and exempt agricultural equipments from levy of all taxes in the upcoming budget.

Well-placed sources told Dawn on Friday that the budget makers were actively considering the proposal to reduce the rates of general sales tax (GST), customs duty and withholding tax on the import of these products from the next fiscal year.

According to the sources, it was also under consideration to exempt duty and taxes on import of high horse power tractors, which are not manufactured locally. The sources said these incentives would reduce the input costs of the agriculture produce and make them more competitive in the international markets.

The government had already levied GST on actual price of urea and on supply, manufacturing, retail and wholesale stages of all kinds of fertilizers as part of IMF's conditionalities of poverty reduction and growth facility (PRGF).

Due to levy of GST on all these inputs the agriculture produce has become less competitive with those of other countries in the international markets. Meanwhile, the Senate's Special Committee (SSC) on WTO has recommended to the government to exempt the export-oriented goods and related materials from the levy of general sales tax (GST).

The SSC members made the recommendation at a meeting headed by Minister for Privatization and Investment Dr Abdul Hafeez Shaikh here on Friday. The SSC members recommended that it was necessary to exempt the export-oriented items from GST to make them more competitive in the international markets.

The members highlighted that under WTO regime the ILO conventions, labour laws, intellectual property rights, standardization and open competition needed to be taken into account.

They noticed that although Pakistan's exports were growing but growth was not being witnessed in some sectors of the industry, while such industries have tremendous potential of growth.

The private sector should take initiative to convince the world regarding the excellent quality of their products and to search for new markets, they suggested. The minister, who is also chairman of SSC, urged the manufacturers to improve quality of their products to increase the country share in the international trade.

He said that we needed to prepare ourselves for the challenges in the globalize economy and to create an environment for better interface between the related industries and the government. "Our industry should come up to international quality standards to attain excellence to compete and market our products across the world," he added.