LAHORE: Lahore Chamber of Commerce & Industry (LCCI) Tuesday urged the government to adopt effective measures for the revival of local engineering industry. LCCI President Kashif Anwar stated this here in a meeting with a delegation from the engineering sector led by former chairman of Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Engr Mumshad Ali. LCCI Senior Vice President Zafar Mahmood Chaudhry and Vice President Adnan Khalid Butt were also present. The PAAPAM delegation informed the LCCI office-bearers that tractor parts manufacturing industry was on the verge of collapse. The delegates mentioned that demand for tractors was about to crash and severe cash crunch due to stoppage of GST (General Sales Tax) refund by FBR (Federal Board of Revenue) to tractor assemblers.
They said the industry employed over 100,000 people mainly in Lahore region, and the recent floods, high inflation, and other factors had badly hit tractor sales leading to closure of tractor production by AGTL (Al-Ghazi Tractors Limited) and four-day week production of Millat Tractors. Both plants carry surplus inventory of CBUs (Completely Built Units) parts, worth billions of rupees and were not purchasing parts from local part making SMEs (Small and Medium Enterprises), leading to their closure and redundancies of over 100,000 skilled workers technicians and engineers, they said, adding that due to drop in fresh bookings and stuck up GST refunds, the assemblers were running short of cash and struggling to make payments to part makers. If the tractors sales drop below 3000 units a month, they apprehended, it was no longer commercially viable for part makers to produce parts, and were, therefore, forced to close their operations.
They said tractor production in the first six months of the current financial year was expected to remain around 10,000 units averaging around 1600 units per month, which was far short of the industry break-even point. They said if the industry did not achieve 3000 units average production per month in the next six months, the industry would not be able to revive itself, adding that it was essential for the government to take concrete steps now, rather than to wait for the next budget. The three steps, they recommended, were to start low mark-up tractor financing through commercial banks and ZTBL (Zarai Taraqiati Bank Limited), facilitate tractor exports as current GST regime was making Pakistani tractor uncompetitive in African market and, release stuck up GST refunds of assemblers to increase industry liquidity. President of the Lahore Chamber Kashif Anwar assured his all-out support to the tractor parts manufacturers of the country, and agreed to take up the matter of this vital national industry with the ministries of Finance, Commerce and Industries.