Tractor industry in 'crisis': PAAPAM demands govt clear over Rs6bn tax refunds

LAHORE: The auto parts vending industry has been closed partially because majority of the units are now running just on a single shift, moving to a complete shutdown position amidst serious blockage of cash flow due to non-payment of billions of rupees sales tax refunds.

In a letter, written to Prime Minister Imran Khan as well as Finance Minister Shaukat Tarin, Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Chairman Abdul Rehman Aizaz reiterated his demand of the government to clear over Rs 6 billion sales tax refunds held for more than 20 months of tractor industry without any delay.

He pleaded that the closure of tractor vending industry is dangerous, especially for agro economy, as it is the lifeline of farm mechanization at a time when the country has been facing severe deficit of food commodities, leading to sharp boost in import bill.

In the letter, Abdul Rehman Aizaz observed that tractor manufacturers and their vending industry are inter-connected and delay in release of ST refunds to tractor OEMs has put the vendors in cash flow blockage, leading to possibility of forced closure of parts manufacturers within few days, leaving millions of direct and indirect workforce jobless.

He pointed out that Pakistan's food import bill has widened by over 50 percent to $1.47 billion in the first two months of this fiscal year to bridge the gap in food production. The continuing food import bill is triggering trade deficit that may cause uneasiness on the external side for the government.

He said that Pakistan spent over $8 billion on import of edible items in the last financial year, while this import bill will go up further in the next few months because the authorities have decided to import another 0.6 million tons of sugar and 4 million tons of wheat to build strategic reserves.

He said that the import bill of all food items posted a growth in value and quantity, indicating a shortage in domestic production, which can be met only through enhancement in per acre yield through farm mechanization.

"The farm mechanization is not possible with closed tractor industry, he said and added that the government is considering it just a closure of tractor auto parts' few hundred SMEs but actually it is creating hindrances in the way of farm mechanization and finally bringing agro-based economy to a halt," he observed.

The present closure of tractor and its vending industry will not only affect the current rice harvesting season but sowing of potatoes, maize and wheat will also be disturbed, resulting into further shortage of food.

He said that we spend billions of dollars on import of food commodities but not ready to pay meager amount of auto vendors' SMEs, which can save billions of rupees import bill.

He said that Pakistan imported 57,000 tons of wheat in first two months of the current fiscal year, showing an increase of 45 percent. Last year in first nine months, the government had imported 3.61 million tons of wheat worth $983.33 million.

The PAAPAM leader asked the government to give the export industry status to the local vending industry, which is fully capable of bridging the huge gap of ever-rising trade deficit not only through enhancing exports but also controlling unbridled imports through "import deletion" of industrial replacement parts. Through "import deletion" we can minimize our dependence on imported goods, preventing the rapid outflow of billions of dollars spent on imported merchandize, he said in the letter.

Copyright Business Recorder, 2021