January 21, 2019: At a time when local tractor industry has been going through its worst ever period in terms of sales and production, the news of import of used tractors has added insult to injury. Mr. Ashraf sheikh, chairman PAAPAM has strongly reacted to the rumors that government is mulling to allow import of five years old used tractors.
Engr. Azhar Ali, Vice chairman PAAPAM urged the government not to entertain the idea as it will have a negative impact on the tractor industry which consists of 300 auto parts manufacturers employing around 50000 people directly and contributing to the treasury by paying taxes and saving foreign exchange by providing import substitution
Mr. Mumshad Ali, Former Chairman PAAPAM said that, on average the industry operates at 75% capacity in a 5 year cycle as the demand fluctuates based on crop yields and market prices. The industry showed growth in the last 2 years due to support to the farmer by the previous government in the form of fertilizer subsidy and interest free loans among other measures. In the past 10 years the industry witnessed 2 downturns once due to imposition of GST and then due to drop in market prices and weather impacts.
He further said that used imported tractors will not go in favor of the farmer as well, as quality of these tractors cannot be ensured and their after sales service will not be possible due to non-availability of trained staff and parts. Parts used in after sales will also have to be imported putting further pressure on Pak Rupee.
Even today after Sale tractor parts using substandard materials and processes are imported from India and other countries by commercial importers at suppressed values under the weight duty regime, and the association has taken this matter up with customs several times but in vain. Parts produced in Pakistan are costlier due to high energy and material costs. Imported used tractors would mean after sales service issues for the farmer, loss of business and closure of tractor part manufacturing units, loss of revenue to FBR and flight of foreign exchange.
It is pertinent to mention here that Pakistan exports 3-4 thousand tractors due to its price and quality, the tractors being manufactured in Pakistan are well suited for the Pakistani agriculture needs and price.
Industry experts also commented that due to the import of used combine harvesters this industry also couldn't develop and importing used tractors will be a step in the wrong direction in every respect.