Tractor industry ‘crisis’: PM urged to lend a helping hand

LAHORE: The Pakistan Association of Automotive Parts & Accessories Manufacturers (Paapam) has urged Prime Minister Shehbaz Sharif to intervene in a crisis facing the tractor industry.

In a letter to the Prime Minister, Paapam highlighted the severe impact of the lack of clarity on the General Sales Tax (GST) refund mechanism on tractor sales.

Since July 1, tractor and tractor parts production and sales have been significantly curtailed due to the ambiguity. The Federal Board of Revenue (FBR) has not notified a mechanism to distinguish between farmers and non-farmers, resulting in a near-stoppage of sales and production closures.

FBR has not notified any mechanism to distinguish between a farmer from whom 10 percent sales tax is to be collected and non-farmer tractor buyer on whom 18 percent tax is to be charged. Already since years, multi-billion GST refunds are stuck up with the FBR resulting in cash starvation for the entire supply chain of tractor manufacturing.

Paapam warned that if the situation is not addressed urgently, massive redundancies are anticipated due to cash starvation across the supply chain. The association requested the Prime Minister’s intervention to resolve the matter and ensure the continued contribution of the industry to the nation’s economy.

Paapam represents over 290 automotive parts manufacturers and is dedicated to supporting its SME engineering member base. The industry is crucial to the agricultural economy and represents a significant portion of Pakistan’s formal, documented economy.