Table of contents list of acronyms
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- Motorcycles
| Buses/Trucks: This sector effectively faces competition from imported CBUs in the presence of relatively low rates of customs duty. Tractors: There are only two major domestic suppliers – Al-Ghazi and Millat tractors. Imports of built-up units have been virtually eliminated by 2010-11. The HHI for this sector is also relatively high at 3795 (see Table 5.1). Further, despite generally depressed demand conditions, sales of tractors have continued to grow and the rate of capacity utilisation is high at 110 percent (see Table 2.3). As such, there is no evidence of a policy of output restriction being followed to raise prices. However, the industry has been the beneficiary of a differential taxation policy whereby tractors had been zero rated from the general sales tax. This is one of the factors contributing to high rates of return. According to Table 5.2, among the various sub-sectors, profitability is the highest in the tractor industry at above 50 percent on capital employed. In fact, contrary to the general trend, profitability has increased in 2010 and reached the peak of 65 percent. The government introduced the 16 percent sales taxon tractors in the latest Budget of 2011-12. But, following a slump in sales, this decision has been reversed and the GST rate has been reduced to 5 percent. The primary way of increasing competition in the tractor sub-sector is to promote new entry, given the high rate of capacity utilisation currently. Also, as the economy picks up, the standard GST rate should be applied to this industry. Motorcycles: This is the only segment of the automotive sector where the market is quite competitive. The HHI is very low at 1170, below the threshold level of 1800. The entry of a large Download 0.77 Mb. Share with your friends:
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