The tractor and vending industry has lauded government's measures announced in the Federal Budget for 2015-16 for promotion of farm mechanisation and increased productivity of the agriculture sector. It may be recalled that on the appeal of the manufacturers of agriculture implements/ tools/machinery, the Federal government has reduced non-adjustable sales tax rate from existing 17 percent to 7 percent, on the local supply and import of certain agricultural equipment/machinery used in Tillage and seed bed preparation, seeding or planting, irrigation, drainage and agro-chemical application etc.
At present, Customs duty, Sales Tax and withholding tax on import of agricultural machinery in aggregate is 28 percent to 43 percent. The government intends to reduce Customs duty, sales tax and withholding income tax cumulatively to 9 percent with effect from 1st July 2015. A senior executive of Millat Tractors told Business Recorder that with the sizeable reduction in GST on locally made agriculture implements, the price of MT's manufactured puddle for seed bed preparation of rice and other crops would come down from Rs 74,000 a piece to Rs 67,000 per piece, net saving of Rs 7,000.
He said with this concession, the tractor manufactures and several hundred vending units would make larger investment for innovated and modern agriculture implements/tools equipment for mechanised farming that is necessary for improved per acre yields of various crops to ensure green revolution in the country.
The industry sources also lauded the government's decision to increase agriculture credit for enhancing the output of agriculture. During the current year, the government had targeted a credit flow of Rs 500 billion, compared to Rs 380 billion during 2013-14, an increase of 32 percent. For the next year, the government is targeting a 20 percent increase to take it to Rs 600 billion. Together with the insurance schemes, the farmers will have much better access to financial sector than in the past, they added. The tractor and vending industry has also welcomed the Punjab government's decision to provide 10,000 tractors on subsidised rates to small farmers during FY 2015-16.