Assemblers raise tractor prices by up to Rs422,000

Published June 19, 2022
The PML-N-led coalition government has proposed a 5pc general sales tax waiver in the budget 2022-23 to bring down tractor prices.—Dawn/File
The PML-N-led coalition government has proposed a 5pc general sales tax waiver in the budget 2022-23 to bring down tractor prices.—Dawn/File

KARACHI: Despite achieving over 90 per cent localisation, the tractor assemblers have increased farm machinery prices by Rs254,000-422,000 in the outgoing fiscal year.

In FY21, the assemblers raised prices by Rs92,000-196,000. An assembler said rupee devaluation and higher freight rates are making an adverse impact on the cost of imported parts.

In FY22, the government continued the relief package that allowed the supply of imported farm machinery and equipment at reduced tariffs (customs duty 0-2pc and GST at 5pc).

In budget 2022-23, the government had proposed to exempt tractors from the 5pc GST which may bring down tractor prices.

The number of operational tractors is 670,000 versus 612,000 in FY21, resulting in the availability of around 0.09 horsepower (HP) per acre against the required power of 1.4HP in both fiscal years.

According to a comparison of Economic Surveys of 2020-21 and 2021-22, NH-480 (55HP), NH-480 Power Plus (55HP), Ghazi 65HP, 640 (75H) and Dabang (85HP), assembled by Al Ghazi Tractors Ltd, are now priced at Rs1.228 million, Rs1.282m, Rs1.419m, Rs1.819m and Rs1.879m as compared to Rs945,000, Rs969,150, Rs1.082m, Rs1.441m and Rs1.479m.

Various models of Millat Tractors Ltd like MF-240 (50HP), MF-350 PS (50HP), MF-260 (60HP), MF-360 PS (60HP), MF375 4WD (75HP) and MF385 4WD (85HP) carry prices of Rs1.251m, Rs1.449m, Rs1.446m, Rs1.527m, Rs2.436m and Rs2.530m as compared to Rs997,500, Rs1.092m, Rs1.150m, Rs1.197m, Rs2.016m and Rs2.152m.

The Economic Survey 2021-22 has also carried a box item titled “Tractor Industry a Success Story: Made in Pakistan” claiming that the industry has established itself on a firm footing by achieving more than 90pc localisation.

Pakistan was a net importer of tractors a few years ago and imported $195 million worth of tractors in 2017. The country had exported tractors worth $47m in FY21, the survey said.

During July-March FY22, Pakistan’s export of tractors was $29.9m.

It claimed that due to the high level of localisation, Pakistan’s low-priced tractors are well-received in Afghanistan and African countries. Botswana, Nigeria and Kenya have emerged as the largest export destinations for tractors.

Massey Ferguson sales in 11MFY22 shrank by 4pc to 30,616 units from 32,051 while Fiat sales improved by a massive 53pc to 20,741 from 13,587 units in 11MFY22.

Published in Dawn,June 19th, 2022

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