The Agricultural Equipment Industry is a key sector that contributes to agricultural growth and productivity. Agricultural Equipment industry plays a key role in supporting the performance of the agricultural sector in India. Farming activities are increasingly getting mechanised, and the availability, quality and performance of agricultural equipment has an increasing impact on improving the output and productivity of the agricultural sector. While India manufactures and deploys a range of agricultural equipment across the industry value chain, tractors and tillers are the two that constitute the bulk of the industry.
The manufacture of basic agricultural implements is largely by village artisans and tiny units, small scale industries and the State Agro-Industrial Development Corporations. Medium scale industries operate in their own premises with adequate infrastructure, sometimes forming a part of an industrial estate. They also have manufacturing and marketing facilities and employ skilled manpower. Products such as diesel engines, electric motors, irrigation pumps, sprayers and dusters are produced in this sector. Complex products such as land development machinery, tractors, power tillers, post harvest and processing machinery and dairy equipment are manufactured by large players in the organised sector. Mahindra & Mahindra’s Farm Equipment Sector (FES), which designs, develops, manufactures and markets tractors for Indian and overseas markets, is the largest manufacturer of tractors in India. Other major players include TAFE, New Holland, John Deere, Escorts, Eicher, HMT, Sonalika and Punjab Tractors.
Indian tractor industry is the largest in the world, accounting for one third of global production. The tractor market in India is cyclic and has been growing steadily over the years. There has been a continuous growth of about 20 per cent Y-o-Y for the industry since 2003. There was a recession between 2000 and 2002 owing to poor monsoons. There was a production of 296,080 tractors in 2005-06 as against 249077 tractors in 2004-05. The market is segmented in terms of horsepower into the 30 HP and less (lower) segment, the 30 HP – 40 HP segment and the higher segment beyond 40 HP. The medium horse power category tractors, 31-40 HP, are the most popular in the country and fastest growing segment, which contributes 51 % of the total market. All major players cater to all the three segments. There has been a trend to move towards higher HP tractors, in recent years. This has been prompted by the need for newer applications and increasing awareness among farmers about new mechanisation options.
93% of the tractor industry is concentrated in the 12 major states, namely Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Maharashtra, Madhya Pradesh, Punjab, Orissa, Rajasthan, Tamil Nadu and Uttar Pradesh. Punjab, Uttar Pradesh and Haryana are the largest markets for tractors, together accounting for more than 50 per cent of sales. Tractor exports from India have been registering continuous growth. From US$ 78 million in FY01, tractor exports rose to US$ 235 million in FY05, a CAGR of 31 per cent. Sizeable quantities are exported to Africa, the Middle East, Asia, South America and other nations. The penetration of almost all categories of agricultural equipment, as measured by the number of equipments per hectare, is quite low in India. Also the penetration levels are also not uniform throughout the country. While the northern region is now almost saturated in terms of new tractor sales, the southern region is still under penetrated.
Assistance in the form of subsidy at the rate of 25 per cent of the cost with permissible ceiling limits is made available to the farmers for the purchase of agricultural equipment including hand tools, bullock-drawn/power driven implements, planting, reaping, harvesting and threshing equipment, tractors, power-tillers and other specialised agricultural machines under the centrally sponsored scheme of Macro Management of Agriculture. According to the Economic Survey 2006-2007, 7,292 tractors, 16,500 power tillers, 64,610 hand tools, 41,854 bullock-drawn implements, 15,236 tractor driven implements, 6,080 self-propelled/power-driven equipment, 81,496 plant protection equipment, 6,587 irrigation equipment and 66,464 gender-friendly equipments were supplied to the farmers under the Scheme during 2005-06.
Anshumant and Gurashish
PGPABM-I(First Year)
MANAGE, Hyderabad
