Paapam seeks release of sales tax refunds for tractor industry

KARACHI: The auto-parts vending industry has closed down partially due to the non-payment of over six billion rupees in sales tax (ST) refunds to the tractor industry. Majority of the units are running on a single shift while vendors say they are moving towards complete shutdown.

In a letter addressed to Prime Minister Imran Khan and Finance Minister Shaukat Tarin, Pakistan Automotive Association of Parts and Accessories Manufacturers (Paapam) Chairman Abdul Rehman Aizaz reiterated the demand that the government must clear over Rs6bn in ST refunds of the tractor industry which have been held up for more than 20 months. He pleaded that the closure of tractor-vending industry was dangerous — especially for agro economy which is the lifeline of farm mechanisation — at a time when the country was facing a severe deficit of foodgrain and a sharp increase in the import bill.

“Tractor manufacturers and their vending industry are inter-connected and the delay in release of ST refunds to tractor assemblers has put vendors in cash flow blockage. This has led to the possibility of forced closure of parts manufacturers within a few days,” the Paapam chief said. He added that this closure would leave millions of direct and indirect workers jobless.

“Pakistan’s food import bill has widened by over 50 per cent to $1.47 billion in 2MFY22 year to bridge the gap in food production, thus triggering trade deficit that may cause uneasiness on the external side for the government,” he said.

Pakistan had spent over a billion dollars on the import of edible items in FY21, while the import bill would further go up in coming months following the government’s decision to import another 0.6 million tonnes of sugar and 4m tonnes of wheat to build strategic reserves, he added.

The Paapam letter noted that the import bill of all food items posted growth in value and quantity, indicating a shortage in domestic production which can be met only through increase in per acre yield through farm mechanisation.

The present closure of tractor and its vending industry would affect the current rice harvesting season and sowing of potatoes, maize and wheat, resulting into further shortage of food, he said.