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Tax break sought for new tractor makers

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The Ministry of National Food Security and Research has proposed that the government should announce tax breaks for new entrants in tractor manufacturing and provide incentives for imports to break the monopoly of existing tractor companies.

Sources told The Express Tribune that the Ministry of National Food Security, in a cabinet meeting, told Prime Minister Imran Khan and cabinet members that the existing two tractor manufacturing firms enjoyed a monopoly in the industry. They were not producing quality tractors but were demanding high prices from farmers, it said. They have also not followed the deletion programme completely to use local components in manufacturing.

In a presentation given to the cabinet last week, the Ministry of National Food Security suggested the way forward to improve the performance of agriculture sector.

Around 64% of farmers have less than five acres of land whereas 89% have less than 12 acres of land.

The ministry said that the available tractor models had inappropriate horsepower as the two manufacturers were producing tractors ranging from 50-85 horsepower. Tractor manufacturers were producing low-quality tractors, which required action.

It sought policy intervention to ensure the tractor industry manufactured a wide range (20-120 horsepower) of tractors.

The ministry called for encouraging the import of suitable tractors by offering duty incentives and subsidised loans. Incentives were also sought for other tractor manufacturers to encourage them to kick off production in Pakistan.

“The Ministry of Finance, Ministry of Industries and Production, State Bank of Pakistan and Ministry of National Food Security can draw up an actionable plan in this regard,” it said.

In crop cultivation at farms, the use of tractors is 22%, rotavators 5%, other implements 19%, threshers 8%, water pumping 6%, trolley and road haulage 40%.

It pointed to the quality of farm implements with no regulatory framework for monitoring. It recommended that the government should determine quality standards and put in place a mechanism to check the manufacturing of agricultural implements.

The ministry also noted the lack of modern technology in farm implements with no research and development work. It stressed the need for promoting precision agricultural implements and utilising modern digital technology.

The ministry demanded incentives for the import of precision agricultural implements by cutting duties and taxes.

It asked for subsidised loans for establishing manufacturing units, especially by identifying designated areas in the Special Economic Zones.

The ministry was of the view that Pakistan lacked qualified human resources with no training facility for utilising precision agricultural implements. There was no proper training for repair and maintenance of these high-value implements.

It emphasised that technical and vocational institutes, both in private and public sectors, should introduce training modules for the precision implements for operators and mechanics.

The ministry proposed different measures to improve farm productivity and called for promoting the use of Global Positioning System (GPS), navigation system and agricultural drones.

Published in The Express Tribune, November 3rd, 2021.

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