Cash starved auto parts manufacturers slash production

Web DeskWeb Editor

02nd Sep, 2021. 05:06 pm

KARACHI: Amid long delays in the sales tax refunds, the tractor industry has reduced its production substantially, which is likely to be halted totally next week, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) said in a statement.

“Moreover, the tractor makers have also stopped orders for parts supply from the vendors, leaving them into a total fiasco. As a result, more than 250 tractor parts manufacturers and their thousands of downstream suppliers have been forced to shut down their industrial operations.

The industry employs around two million people with this business directly or indirectly.

Paapam senior vice president Abdur Raazaq Gauhar appealed to the prime minister to rescue the already lean and Covid-hit tractor vending industry by releasing its Rs6 billion sales tax refunds, stuck up with the Federal Board of Revenue (FBR) for the last one-an-a-half years.

The industry has been forced to halt its production; following the suspension of parts supply orders along with the sales tax payments, Gauhar added.

The liquidity problem was affecting more than 250 vendors, feeding OEMs and aftermarket requirements of the tractor industry.

The closure of the tractor industry would also destroy the largest informal agro sector, which is the backbone of the country.

Paapam vice chairman Irfan Qureshi said that the undue stoppage of sales tax refunds over the last 18 months has mounted to Rs6 billion, which were due to be released within three days as per the government’s own issued state order SRO 363.

Paapam’s former chairman Nabeel Hashmi said that how the government could achieve the GDP growth targets by placing the industry on a ventilator. This undue delay in decision making has given a circular effect to the whole vending industry to the grassroots level, forcing them to close down at all.

Gauhar said that the tractor vending industry was already operating only on marginal profitability and working hard to supply parts to the tractor industry aimed at increasing inputs. They have limited financial resources and working capital lines from the banks.

Besides clearing the overdue sales tax refunds at the earliest, the Federal Board of Revenue (FBR) also needs to ensure that the SRO 363(1)/2012 should be followed in spirit in ERS of the FBR that bounds the govt to refund the sales tax in three days, he said.

He appealed Prime Minister Imran Khan to intervene in the matter, giving directives to the tax authorities to release the refunds, at the earliest, besides launching a permanent refunds’ efficient system for the auto sector to clear the sales tax refunds on a regular basis within the minimum possible time.

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