The sales of tractors have declined exponentially on year on year basis, which clearly shows that the tractor industry has succumbed to the wrong policies of the government.
According to the details, total tractor sales in 1st quarter of FY2015-16 stood at 6,745 units, down 28 per cent from 9,363 units during the same period last year.
“The negative growth is not a good omen for the tractor industry that just came out of GST fiasco. This means it has to go through another crisis just because the policies of the government are not supportive to this industry,” said Pakistan Automotive Manufacturer’s Association (PAMA) Director General Abdul Waheed Khan.
“The main reason of the current sharp decline in tractor sales is that the provincial governments of Sindh and Punjab did not initiate their tractor schemes they announced in July. This shows their lack of interest towards the wellbeing of both the farmer and the local tractor industry,” Khan added. “It is quite unfortunate that this industry, that has achieved more than 90 per cent localization, is getting severely hurt by the policies of the government,” he said.
The PAMA director general added that there are more than six assemblers in the industry including two major players, who are producing standard tractors with cheapest prices in the world, and no regional country including China and India can compete with them.
“First the government imposed heavy GST which knocked down this industry, and now they are mulling over allowing import of used tractors in the country. They are not realizing that this strategic industry in our agricultural country cannot survive this kind of adventures,” reasoned Khan.
He further stated that the government could have adopted a rational approach to help this industry fully exploit its export potential. “One locally produced tractor is available in $7,000 while a similar quality tractor costs $13,000 in international market,” he said.
One example, he added, about the inconsistent policies of the government was that the government changed the GST regime for the industry five times in last five years. Resultantly, the industry went into tailspin in the year 2011 when its production volume reduced to almost half. The industry has still not recovered from that debacle.
Khan was of the view that tractor business is cyclic, dependent on two main crops. ”Now the situation is that the farmers have held back their buying of tractors anticipating the initiation of provincial subsidized tractor schemes. And both farmers and the industry are suffering due to the indifference of the provincial governments in this regard,” he said.
He added that the inventories of major tractor manufacturers had also gone up since they were expecting big support from these schemes and had heavily increased their production anticipating significant rise in demand. “The government should have mercy upon the local tractor industry and save it from its current plight, which other local industries are in too, due to the bad policies of the government,” Khan said.