September 26, 2018: An emergent meeting of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Managing Committee was held on 25th Sept. 2018 to discuss the impact of imported tractors on Pakistan industry, agriculture and employment.
Chairman PAAPAM presided the meeting and Karachi chapter joined via video link under the leadership of Senior Vice Chairman Muhammad Ashraf Sheikh. The meeting was called after the matter of import of used tractors came up on the agenda of the ECC.
The Managing Committee decided to start its engagement campaign with the Government to convince them to not 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 national treasury by paying taxes and saving foreign exchange by providing import substitution.
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 the imposition of GST and then due to drop in market prices and weather impacts.
According to the industry experts, used imported tractors will not go in favor of the farmer as well, as the quality of these tractors cannot be ensured while the after sales services will also 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.
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