Agriculturists as well as business community have expressed its concern on increasing the General Sales Tax on tractors by 17 percent. Resultantly, the price of tractors has increased Rs 1, 75,000. They have called for the withdrawal of an increase of General Sales Tax on tractor industry from 10 percent.
The decision had hit the production of tractors in Pakistan which fell to merely 12,000 from 75,000 per annum. Now it would also hit the entire agriculture sector hard besides rendering thousands of skilled workers jobless. In a memorandum to Prime Minister Nawaz Sharif , Ministry of Industries and Production, Finance, the Multan Chamber of Commerce and Industry's sub-committee on engineering headed by Mian Iqbal Hassan said the tractor assemblers and their hundreds of vendors fear a severe drop in sales as a result of massive hike in GST with effect from 1st January 2014. The 17 percent GST to be paid by the country's farmers which will further curtail their ability to purchase tractors. Despite producing the cheapest tractor in the world, the farmer is still not able to afford a tractor and requires support in the form of subsidies and soft loans from the government to purchase a tractor.
The MCCI president said that Pakistan lags far behind India in crop yield, crop intensity and number of tractors per hectare. According to agri experts Pakistan currently needs 800,000 more tractors to match India in per hectare tractor population. He said that an industry with installed capacity of 100,000 units per annum is expected to close the current financial year with less than 30,000 units. This means 70 percent drop in revenues for the FBR from this industry in the fiscal year 2013-14. In sharp contrast India with 0 percent central GST, will close this year with the highest ever production of over 600,000 tractors, ie, 20 times higher than Pakistan. Mian Iqbal Hassan, a senior member of MCCI said drop in tractor sales means unemployment for thousands of skilled workers who work in hundreds of factories producing tractor parts for the tractor assembly plants.
He said that it was a good omen for the manufacturing sector that the government had decided to unveil new industrial and auto policies but he hoped the consultation with the stakeholders would be ensured before finalising these documents.