Tractor industry likely to shut operations as production nosedives

Amidst long delay in sales tax refunds the tractor industry has reduced its production substantially, which is likely to be halted totally by next week.

Moreover, the tractor makers have also stopped orders for parts supply from the vendors, leaving them into total fiasco. As a result, more than 250 tractor parts manufacturers and their thousands of downstream suppliers have been forced to shut down their industrial operations, rendering millions without jobs, because around two million people are engaged with this business directly and indirectly.

These views were expressed by the PAAPAM SVP Abdur Raazaq Gauhar, in a written statement issued here Thursday, making an appeal to the Prime Minister of Pakistan to rescue the already lean and Covid19-hit tractor vending industry by releasing its Rs6 billion sales tax refunds, stuck up with the FBR for the last one and a half years. He said that the industry has been forced to halt its production following the suspension of parts supply orders along with the sales tax payments, he added.

Abdur Raazaq Gauhar said that a meeting of PAAPAM was held at its head office with a view to discuss and make a strategy to get out of this severe crisis of liquidity crunch amidst unpaid sales tax refunds of billions of rupees.

PAAPAM top leadership, including Syed Nabeel Hashmi, Razzaq Ahmed, Capt (r) Muhammad Akram, Tariq Nazir, Usman Malik, Mumshad Ahmed and PAAPAM Senior Vice Chairman Abdur Razaaq Gauhar, reiterated that the vending industry had already drained out all the liquidity they had. They said that the liquidity problem is affecting more than 250 vendors, feeding OEMs and aftermarket requirements of the tractor industry. Saeed Iqbal said that the closure of the tractor industry would also destroy the largest informal agro sector which is the backbone of the country.

PAAPAM vice-chairman Irfan Qureshi said the undue stoppage of sales tax refunds over the last 18 months had mounted to Rs.6 billion which were due to be released within 3 days as per the government’s own issued state order SRO 363. PAAPAM former chairman Nabeel Hashmi said how the government could achieve the GDP growth targets by placing the industry on a ventilator. This undue delay in decision making has given a circular effect to the whole vending industry to the grassroots level, forcing them to close down at all.

PAAPAM SVP Abdur Raazaq Gauhar stated that the tractor vending industry was already operating only on marginal profitability and working hard to supply parts to the tractor industry aimed at increasing inputs. They have limited financial resources and working capital lines from the banks. Besides clearing the overdue sales tax refunds at the earliest, the Federal Board of Revenue also needs to ensure that SRO 363(1)/2012 should be followed in the spirit in ERS of FBR that bounds the govt to refund the sales tax in 3 days, he pointed out.

He appealed to PM Imran Khan to intervene in the matter, giving directives to the tax authorities to release the refunds at the earliest, besides launching a permanent refunds’ efficient system for auto sector to clear the sales tax refunds on regular basis within the minimum possible time.