KARACHI: Local manufacturers on Saturday said import of used tractors along with exemption from duties and taxes would result in total collapse of the domestic industry.

The local industry – which consists of 300 tractor parts makers and employs around 50,000 skilled labour – slammed Punjab Agriculture Department proposal to the Ministry of Industries and Production for allowing import of used tractors (up to five years old) and exempting these from import duties and taxes.

In a letter to Adviser to Prime Minister on Commerce, Industries and Finance, Abdul Razzak Dawood, vendors said tractor sales have already been on the decline for the last five months due to low demand.

According to figures of Pakistan Automotive Manufacturers Association (PAMA), sale of Fiat tractors dropped to 7,868 units in the first five months of the current fiscal (5MFY19) from 10,838 units in same period last fiscal, followed by plunge in sales of Massey Ferguson (Fiat) tractors to 15,745 from 16,421 units in the same period.

Chairman Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Mohammad Ashraf Shaikh questioned where the Punjab government would arrange foreign exchange in the prevailing economic scenario for import of used tractors.

On average, the tractor industry operates at a capacity of 75 per cent in the five-year circle as demand fluctuates based on crop yields and market prices. Still there is a room for manufacturing of 100,000 more tractors per annum in the country, the Paapam chief said.

Pakistani tractors and their parts are also being exported to different countries.

The local industry has already achieved 90pc localisation, he claimed.

“The used imported tractors would not go in favour of farmers as the quality of these farm machines cannot be ensured. The after-sales service would also not be possible due to ready non-availability of trained staff and spare parts,” he said.

The parts used in after-sales service would also have to be imported putting further pressure on foreign exchange reserves, he said.

He urged Mr Dawood to turn down the devastating proposal of the provincial agriculture department and help save the local industry.

“The idea behind this move is to break down the existing monopoly of black market on tractors,” the department believed.

During the third meeting of the provincial Cabinet held on Sept 23, co-chaired by Prime Minister Imran and Chief Minister of Punjab Usman Buzdar, it was decided that imports of used tractors (up to five years-old) maybe allowed.

In order to harness the export potential in agriculture, Pakistan needs to transform subsistence agriculture to a commercially oriented, internationally competitive and highly mechanised agriculture, the agriculture department said.

The mechanisation is primarily dependent upon the variety of power sources and advance hi-tech farm machinery and equipment including tractors, the provincial agriculture department added.

Published in Dawn, December 16th, 2018