KARACHI, June 16: The local tractor industry and its vendors anticipate that the duty free import of used and new tractors, announced in the 2006-07 budget, will help dumping of junk tractors of various origins in the country.
They say that the government has forgotten the negative impact of Awami Tractor Scheme on the local industry and again the industry is being put in hot waters.
Senior executive director Millat Tractors, Sohail Bashir Rana told Dawn on telephone from Lahore on Friday that the government had not issued any SRO about the duty free import of tractors yet. Besides, the local industry is awaiting clear cut directions from the government as to how it would survive after duty free import of tractors.
Actually, the vendor industry will feel the real pinch of this decision, and also the local manufacturers who have achieved 90 per cent deletion in tractor manufacturing, he said adding that the farmers, in case they buy imported tractors, will face problems in getting spare parts and after sales service.
He said he could not say how much market share of the local industry would be grabbed by the imported tractors in coming months and what would be its impact on the sale of locally made tractors.
The industry can easily compete both in price and quality with imported tractors if they are of standard quality, but in case tractors made in China and Eastern Europe start coming, then it might be a hard task for the industry to compete, Sohail said adding that the industry enjoys 99 per cent market share currently.
Local industry (two main players — Millat and Al-Ghazi) will produce 50,000 tractors by the end of current fiscal and they plan to roll out 60,000 units in 2006-07. Both the manufacturers had assembled 29,659 units in 2004-05.
He recalled that the government had allowed duty free import of 10,000 tractors with specified quantities to those companies, which planned to start its local assembly. But, the Sindh High Court had quashed the scheme of duty free import of tractors in May, 2006. So far over 1,000 tractors had landed under the scheme.
The government had frozen the prices of locally produced tractors in 1998, and only minor adjustment in prices was allowed since then. For the last two years, prices have not been changed. “There is, however, no sale price restriction on the imported tractors,” he added.
Mr Sohail said that 75 per cent sale of tractors was now on cash basis and through commercial banks’ loan schemes, while 25 per cent of tractors sales is through loans extended by the Zarai Taraqiat Bank Ltd. Some years back, 95 per cent sales of local tractors were made through ZTBL.
Chief executive of Al Ghazi Tractors Pervez Ali in a letter to the federal minister of Food, Agriculture and Livestock (Minfal) said that the bonafide local industry and its 270 supply-chain vendors would be hit by the special incentive of allowing duty free import of new and used tractors. He added that this policy had come on the heels of the previous duty free import scheme abolished recently by the High Court.
“This policy may damage the entire progress made by the local industry during last 25 years in one clean sweep,” he said.
Chairman Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam), Razzak Ahmed in his letters to the prime minister and the president said that the duty reduction to zero per cent from 15 per cent on import of tractors might boost the agriculture sector, but it would eventually hurt the local tractor industry and its vendors.
“The duty free import policy will support the economies of India, China and Eastern Europe at the expense of people of Pakistan. Junk of these countries will be dumped into Pakistan without any backup support,” he said adding that the industry was subjected to various taxes, while importers have been given a free hand to import new and old tractors. The duty free import totally negates the principles of new ‘Tariff Based System’ which is being implemented from July 1, 2006, he said.
