The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) convened an emergency meeting to address the ongoing crisis in the tractor industry, marking the second major setback in the current financial year.
The industry’s first crisis stemmed from imposing a 10% General Sales Tax (GST) on tractors in the Finance Bill 24/25. This measure returned the sector to a refund regime, exacerbating existing refund delays amounting to billions of rupees from previous years. The situation was eventually rectified with the intervention of Federal Industries Minister, Mr. Rana Tanveer.
However, the industry is now grappling with a second blow due to delays and cuts in implementing the Green Tractor Scheme, announced by the Government of Punjab in its Finance Bill 24/25. Initially, the scheme promised a PKR 1.5 million subsidy per tractor for 30,000 units but was later scaled down to PKR 1 million for only 9,500 tractors.
Adding to the turmoil, the cancellation of Punjab’s wheat procurement drive despite earlier commitments has created further uncertainty. Additionally, a poor cotton yield last year and falling rice prices have reduced farmers’ purchasing power, leading to a 50% decline in tractor sales compared to the previous year.
As FY 24/25 progresses, market conditions remain grim. Farmers are reluctant to invest in tractors, anticipating a second phase of the subsidy program and awaiting clarity on wheat procurement policies. Meanwhile, significant outstanding payments under the Green Tractor Scheme remain unsettled, despite deliveries completed two months ago.
The resulting cash flow crisis has forced many tractor parts manufacturing units, primarily Lahore-based SME engineering industries, to halt production due to a severe shortage of orders.
In response to these challenges, PAAPAM Chairman Usman Aslam Malik, alongside Former Chairmen Mumshad Ali, Tariq Nazeer, Former Senior Vice Chairman Saeed Iqbal, Irfan Qureshi, and the current Managing Committee, convened to strategize a way forward. The association unanimously agreed to escalate the matter in print and electronic media and to formally appeal to Chief Minister Punjab Ms. Maryam Nawaz Sharif and relevant ministries for urgent intervention and clarity on the future of the Punjab-based tractor industry.
PAAPAM calls upon the government to swiftly address these issues and safeguard the livelihoods of thousands dependent on this vital sector.
