The government has announced the imposition of customs duty (CD) on the import of agricultural tractors as part of the new fiscal budget. The CD rates vary based on the engine power of the tractors, with the aim of promoting domestic tractor manufacturing and supporting the local industry.
According to the details, the government has set a customs duty of 15% on tractors with an engine power between 26 kW and 75 kW. For agricultural tractors falling outside this range, the customs duty is set at 10%. The differentiated CD rates are intended to encourage the production and purchase of tractors that align with the specific needs of the local agriculture sector.
It is important to note that tractor manufacturing in Pakistan has witnessed a localization rate of up to 90%. However, the budget document does not specify whether the customs duty applies to completely built-up (CBU) units or completely knocked down (CKD) kits used for assembly in the country.
In the case of CBUs, the customs duty is expected to have a significant impact on the final price of the tractor, potentially influencing affordability for buyers. On the other hand, for CKDs, where tractors are mostly manufactured locally and indigenized, the impact on prices is expected to be relatively lower.
The government’s decision to impose customs duty on agricultural tractors aims to promote the domestic manufacturing industry, create employment opportunities, and reduce dependency on imported machinery. By encouraging the purchase of locally produced tractors, the government seeks to support the agriculture sector, which plays a vital role in the country’s economy.
These measures are in line with the government’s broader strategy to enhance self-sufficiency, boost local industries, and foster sustainable economic growth in Pakistan. The imposition of customs duty on agricultural tractors is expected to contribute to the overall development and progress of the agriculture sector, ensuring a more robust and self-reliant future.