The sales of tractors witnessed further decline in May on a month on month basis due to the non-notification of the subsidy announced by the government. According to the industry figures released by Pakistan Automotive Manufacturers Association (PAMA), tractors sales were 3599 units in May 2019 while it declined to just 1843 units in May 2020.
In April, the government announced a sales tax subsidy on locally manufactured tractors as part of the coronavirus relief package. But this took a heavy toll on the tractor industry because the farmers are not buying tractors and awaiting reduction in prices of tractors by dint of this announcement of the subsidy. “The government took a good step to announce subsidy as a relief to the industry in these testing times but this announcement has not been notified yet.
Hence, the customers held back their money waiting for the prices to decrease after the subsidy,” said a source. “Resultantly, tractor sales got hit badly and this good step of the government has become counterproductive which may lead to further production cuts and plant shutdown,” said a source.
Earlier, the tractor industry was hoping that subsidy on the locally-manufactured tractors will help the industry to get back on track if swiftly implemented. But this delay in the finalization of the subsidy has been nullifying all positive impacts of this announcement for the local tractor industry.
The industry started production after ease in the lock-down last month but the non-notification of the subsidy will result in the increase of inventory of tractors. Since the farmers are now waiting for the SRO to become effective to get discounted prices, the tractor industry has sold insignificant quantities last month.