THE decision of the Economic Coordination Committee (ECC) of the cabinet to allow import of used tractors under the Kissan Package is clearly unwise, without any rationale, and, seemingly aimed at serving the vested interests.

Currently, the country is facing a lingering economic crisis that is adversely impacting industrial activities in particular. The output of the large-scale manufacturing (LSM) sector, of which automotive and tractor industry is a major component, has witnessed contraction since the start of the current fiscal year, and the shrinking trend is continuing, with the overall growth being projected to slow down to 7.4 per cent by the end of 2022-23 fiscal.

Tractor industry had registered a robust growth in recent years, and if the government allows import of five-year-old tractors on monetary concessions, it will adversely affect the tractor industry, which is already in crisis. As the production and sales of tractors have plummeted in recent months, performance of the tractor industry has recorded lowest utilisation of the installed capacity, with the sale of only 5,800 units in the last five months.

Two major tractor makers had closed down their production plants for significant periods from September to December last year. The production at major tractor manufacturers, like Millat Tractors and Al-Ghazi Tractors, still remains suspended effective Jan 6, primarily due to non-availability of foreign exchange for the import of components and accessories required for assembly of tractors, and a low demand in the domestic market due to poor economic conditions.

Even in good days, the capacity of the tractor industry remains underutilised as it produces 58,880 units a year optimally against an annual installed capacity of 100,000 units. Tractor produc- tion of Al-Ghazi-New Holland, Millat-Massey Ferguson, and Orient-IMT brands has attained a deletion level of as high as 90pc. Things will get worse in case the ECC decision is implemented.

The negative growth of automotive and tractor industry has also adversely affected the performance of auxiliary and ancillary industries.

To achieve the cherished goal of self-reliance through higher value addition and optimal indigenisation, the government should support the automotive and tractor industry through a revised framework, revisiting the existing auto policy and the proposed action plan.

Also, it is imperative that the long- awaited integrated industrial policy is finalised, announced and correctly implemented without further delay to stimulate the process of reviving industrialisation at the national level.

Hussain Siddiqui
Islamabad

Published in Dawn, February 3rd, 2023