Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has appreciated the Punjab government for setting aside of Rs 5 billion in the budget 2015-16 for providing subsidy on 25,000 tractors. PAAPAM members who have seen drop in tractor sales in the last two years due to economic hardships of the farmers also appreciated the Sindh government for announcing subsidy on 29,089 tractors in the provincial budget, PAAPAM Senior Vice Chairman Mumshad Ali said in a statement here on Thursday.
The association, however, suggested to both governments for diverting funds of tractor schemes based on the total production capacity of the country and shortage of tractor in the country. Giving subsidy on limited number of tractor resulted in misuse of scheme and boom and bust for the tractor industry putting the vending units in financial hardships. Mumshad lamented that about two month has lapsed since the announcement of the budge but details of the tractor schemes have not been made public so far. This has resulted in slow down in tractor bookings as farmers are still waiting for the scheme. The impact of these schemes would be felt in downstream industries as well as in the output of the agriculture sector.
He further said that the tractor industry in Pakistan is in the forefront of localisation levels. As such, the companies serving as vendors to the tractor industry are also expected to benefit from the announced scheme, he added. He exclaimed that such schemes, with government's contribution amounting to billions of rupees, were misused at the same time by the investors while availing cash subsidy and buying tractors under provincial schemes and selling them in the market at a price lower than the price being offered by the tractor manufacturers thereby affecting the business of both tractor manufacturers and the auto part makers. The provincial governments should ensure transparency in the schemes giving preference and equal opportunities to all the local tractor assemblers of the country, while discouraging imported tractors, he added.