FARM TRACTOR MARKET IN INDIA

KEY FINDINGS

• The Indian farm tractor market is poised for significant growth from 2024 to 2030, driven by increasing mechanization in agriculture and government initiatives promoting farm mechanization.
• With rising demand for higher horsepower tractors to meet the needs of large-scale farming, manufacturers are expected to focus on producing technologically advanced and fuel-efficient models.
• Regional disparities in mechanization levels across India present opportunities for market players to tailor their products and services to meet specific regional needs and preferences.
• Collaborations between tractor manufacturers and technology firms are likely to accelerate the adoption of precision farming technologies, enhancing productivity and sustainability in agriculture.
• The shift towards electric and autonomous tractors is anticipated to gain momentum during the forecast period, driven by concerns over environmental sustainability and labor shortages.
• Government support through subsidies and incentives for the adoption of modern agricultural equipment is expected to further fuel market growth during the forecast period.
• Increased awareness among farmers regarding the benefits of mechanization, such as improved efficiency and reduced labor dependency, is projected to drive the demand for tractors across rural India.
• Challenges such as access to finance, infrastructure constraints, and the need for skill development among farmers may hinder the pace of market growth in certain regions.
• Market players are likely to focus on expanding their distribution networks and providing after-sales support services to enhance customer satisfaction and loyalty.
• Overall, the farm tractor market in India is forecasted to witness robust growth driven by technological advancements, government initiatives, and changing farmer preferences towards mechanization and modernization of agriculture
• Despite the global pandemic and nationwide lockdown, the sales momentum of the Indian tractor industry was not affected. The industry has reported aggregate volume growth of 22% YOY in FY 2021.
• FY2022 could be challenging to sustain this strong growth trajectory. And, any potential risks such as an inadequate monsoon in the coming year may limit the growth print to a lower volume.
• Govt of India offers subsidies for new tractors to promote the mechanization component of the Macro-management scheme of agriculture which attracts farmers to buy new tractors equipped with new technologies
• During the past four decades, the tractor industry grew at a compounded annual growth rate (CAGR) of 10%.
• In February 2021, the first CNG-powered tractor was launched which has direct savings of 55% in fuel cost annually. Within the next two years, the government is likely to promote Bio-CNG, ethanol and electric tractors which would help reduce operating costs for farmers
• As India stands second worldwide for farm outputs. The share of agriculture in India’s GDP has reached 19.9% for the first time in the last 17 years, making it the sole bright spot in GDP contribution and employing 41.49% of the workforce in 2020
• All-time high price of Diesel in the country remains a major threat to the market. With global crude prices firming up further on increased economic activity, Diesel prices are unlikely to come down soon in the country

FARM TRACTOR MARKET IN INDIA OVERVIEW

• The Indian farm tractor market is poised for steady growth over the next six years, with a projected Compound Annual Growth Rate (CAGR) of 5.55%. This translates to a market value exceeding USD 2.6 billion by 2030.
• This growth is fueled by several factors. Government initiatives focused on rural development are a key driver. These initiatives aim to improve infrastructure and provide financial assistance to farmers, making it easier for them to invest in mechanization.
• Furthermore, a growing focus on agricultural productivity is pushing demand for tractors. Tractors play a vital role in various agricultural tasks, from land preparation and sowing to harvesting and transportation. By increasing efficiency, tractors can help farmers produce more food on less land.
• The rising disposable income of farmers is another factor influencing the market. As their income grows, farmers are becoming more open to investing in advanced farm machinery, including tractors with greater horsepower and functionalities.
• However, the market also faces challenges. A significant portion of Indian farms are small and landholdings are fragmented. This can limit the affordability and practicality of owning large tractors for some farmers.
• Financing options for tractors can also be a hurdle, especially for small and marginal farmers. High-interest rates on loans can make it difficult for them to invest in new machinery.
• Despite these challenges, the long-term outlook for the Indian farm tractor market remains positive. The government's continued focus on agriculture, rising incomes, and the increasing adoption of technology in farming are all expected to propel the market forward.
• The market is also witnessing a growing demand for compact tractors. These tractors are suitable for small landholdings and offer greater maneuverability. Additionally, there's a rising interest in technologically advanced tractors equipped with features like GPS guidance and telematics systems.
• In terms of market share, domestic players like Mahindra & Mahindra hold a dominant position. However, international tractor manufacturers are also making inroads into the Indian market, offering a wider range of options for farmers.
• Looking ahead, the farm tractor market in India is expected to evolve alongside the changing needs of the agricultural sector. With a focus on efficiency, sustainability, and technological advancements, the market is set for an exciting future.

INTRODUCTION TO FARM TRACTOR MARKET IN INDIA

A farm tractor is a powerful agricultural vehicle designed to perform various tasks on the farm, such as plowing, tilling, planting, and harvesting crops. These machines typically consist of a powerful engine, sturdy chassis, and multiple attachments or implements that can be easily interchanged to suit different farming operations. Tractors play a crucial role in modern agriculture by significantly reducing the manual labor required for various tasks, thereby improving efficiency and productivity on the farm.

There are several types of farm tractors, including utility tractors, row crop tractors, orchard tractors, and specialty tractors tailored for specific farming applications. Each type of tractor is designed with unique features and specifications to meet the diverse needs of farmers operating in different agricultural environments.

The benefits of using farm tractors are numerous. They enable farmers to complete tasks more efficiently and quickly, leading to increased productivity and higher yields. Tractors also help reduce labor costs and physical strain on farmers, making farming operations more sustainable and less dependent on manual labor. Additionally, modern tractors often come equipped with advanced technologies such as GPS guidance systems and precision farming tools, further enhancing productivity and precision in agriculture.

Despite their many benefits, farm tractors also pose certain risks and challenges. One significant risk is the potential for accidents and injuries, particularly when operating heavy machinery in challenging terrain or under adverse weather conditions. Moreover, the initial investment cost of purchasing a tractor and its associated implements can be substantial, which may pose a financial challenge for small-scale farmers with limited resources. Additionally, the maintenance and repair costs of tractors can be high, especially if they are not properly maintained or operated.

Furthermore, the widespread adoption of tractors in agriculture can have environmental consequences, such as soil compaction and increased fuel consumption. Soil compaction caused by heavy tractors can degrade soil structure and reduce fertility over time, impacting long-term agricultural productivity. Additionally, the use of fossil fuels in conventional tractors contributes to greenhouse gas emissions and air pollution, highlighting the need for sustainable alternatives such as electric or autonomous tractors in the future.

Overall, while farm tractors offer significant benefits to modern agriculture, addressing their associated risks and challenges is essential to ensure sustainable and efficient farming practices in the long term.

India stands second worldwide for Farm outputs. The share of agriculture in India’s GDP has reached 19.9% for the first time in the last 17 years, making it the sole bright spot in GDP contribution and employing 41.49% of the workforce in 2020.

Agriculture was largely insulated from the lockdown in India as timely and proactive exemptions from COVID-induced lockdowns to the sector facilitated uninterrupted harvesting of crops. However, supply chain disruptions impacted the flow of agricultural goods.

FARM MECHANIZATION IN INDIA

 Mechanization of agriculture enhances productivity, besides reducing human drudgery and the cost of cultivation. Mechanization also helps in improving the utilization efficiency of other inputs like the safety and comfort of the agricultural worker.

Total farm mechanization in India has been lower at 40-45% compared to other countries such as the USA (95%), Brazil (75%) and China (57%). The government has decided to enhance farm power availability from 2.02 kW/ha (2016-17) to 4.0 kW/ha by the end of 2030 to cope with increasing demand for food grains.

The farm mechanization market in India has been growing at a CAGR of 7.53 per cent during 2016-2020 due to thrust given by various government policies

THE RISE OF THE FARM TRACTOR MARKET IN INDIA

Long back then in 1961, the annual production of tractors was 880 units per year and major manufacturers were Eicher, Gujrat tractors, TAFE, Escorts and M&M. Credit facilities for farmers continued to improve and the tractor market expanded rapidly with the total use passing the half million mark by 1980 to about 700000 units per year in 2020. Today about 20% of world tractor production is carried out in India.

India’s growth is unmatched even with the country's long history of tractor manufacturing and various policies adopted by the government to enable it to effectively meet the demand.

95% of tractor sales are on credit. Credit is extended by Commercial banks, state land development banks and regional rural banks.

POWERTRAIN TRENDS IN THE FARM TRACTOR MARKET IN INDIA

Most companies use Constant Mesh transmission and prefer center Shift, these types of tractors have about 60% market share, For quieter operation, more durability and less maintenance. Over the past two years, manufacturers have been less involved in the innovation of powertrains and more concentrated on improving product portfolios like live monitoring and Diagnostics tools in instrument clusters.

Mahindra & Mahindra Ltd and Mitsubishi of Japan to develop four new platforms for tractors ranging from 13HP to 70HP.

Tractors and Farm Equipment Limited (TAFE), and IIT-Kanpur, India will together be developing technology for tractor engines that can run on Dimethyl Ether (DME), rather than fuels like diesel and petrol. DME is clean burning and non-toxic, and is potentially renewable fuel.

The minimum lifting capacity of PTO pumps in India varies from 750Kgf to 3650Kgf because this feature is very important in India as tractors are used for non-agricultural purposes also.

TAFE and New Holland procure their tractor engines from Simpsons and Fiat Powertrain Technologies (FPT). Mini & Compact tractors with their power ranging from 15Hp to 50Hp have a market share of almost 90% in India.

TOP 10 TRACTORS IN FARM TRACTOR MARKET IN INDIA - 2020

Here is a list of the top 10 tractors in India in 2020:

• Mahindra 475 DI (4-cylinders, 42 HP, 2830 cc, ₹45-5.80 lakhs)
• Farmtrac 60 (3-cylinders, 50 HP, 3147 HP, ₹6.30-6.80 lakhs)
• John Deere 5310 (3-cylinders, 55 HP, 2900 cc, ₹7.89-8.50 lakhs)
• Sonalika 745 DI III Sikander (3-cylinders, 50 HP, 3065 cc, ₹5.75-6.20 Lakhs)
• Massey Ferguson 1035 DI (3-cylinders, 36 HP, 2400 cc, ₹5.25-5.60 Lakhs)
• New Holland 3630 TX Plus (3-cylinders, 55 HP, 2991 cc, ₹5.70-6.35 Lakhs)
• Powertrac Euro 50 (3-cylinders, 50 HP, 2700 cc, ₹6.6-7.25 Lakhs)
• Swaraj 735 FE 50 (3-cylinders, 39 HP, 2400 cc, ₹5.5-5.85 Lakhs)
• Eicher 380 DI (3-cylinders, 40 HP, 2500 cc, ₹5.30 Lakhs)
• Kubota MU5501 (4-cylinders, 55 HP, 2400 cc, ₹8.86 Lakhs)

FARM TRACTOR MARKET IN INDIA'S MARKET DYNAMICS

Indian tractor market is the second biggest market worldwide which accounts to one-third of the global production. China and the United States of America are the other major tractor markets in the world. The market share of less than 20 HP tractors doubled in recent years and the segment has seen much technological advancement.

Sales within India closed at 802,670 units in 2020, 11 % higher than 2019 volumes and 1 % more than the previous all-time record, set in 2018 during a pandemic year. Mahindra & Mahindra- the market leader recorded an average sales growth of >15% post-lockdown every month and their total market share declined 2% in 2020 compared to 2019.

TAFE had an 18% market share and a rise of 15.6% in sales. But, the top 3 market leaders- Mahindra & Mahindra, TAFE and Sonalika have a combined market share of over 72%. Even during this economic slowdown, the stand-out performer in the Indian tractor Industry was Japan-based Tractor manufacturer- ‘Kubota’ which grew its sales by 18% and a market share of 0.44%.

Based on the last 5 Financial Years, Mahindra & Mahindra holds the top position in its market shares at around 39%. Sonalika has a market share of 15% and had a growth of 40.5% in 2020 compared to 2019. Kubota is the stand-out performer with a 1.8% share in the market considering the company arrived in 2016.

FARM TRACTOR MARKET IN INDIA SIZE AND FORECAST

The farm tractor market in India is estimated at $XX Million in 2020 growing at –4.5% CAGR till 2025.

COMPETITIVE LANDSCAPE IN FARM TRACTOR MARKET IN INDIA

• Massey Ferguson tractors launched its new DYNATRACK Series - The Hydraulics system of the tractor moves to the top of its segment by offering superior lift capacity, productivity and speed. It has an extendable wheelbase, which makes it ideally suitable for agricultural, haulage and commercial applications
• Escorts Limited launched India's first autonomous concept electric tractor Farmtrac Atom 26, which has been manufactured in collaboration with seven technology giants, namely Microsoft, Bosch, Reliance Jio, AVL, Trimble, Samvardhana Motherson Group and Wabco, with the power of next-generation digital vehicle technologies for enabling precision-based farming.
• Sonalika by introducing advanced technology equipped tractors for the global market throughout the unprecedented year and registered 40.5% growth, which is 3X of industry growth.
• Sonalika launched the ‘Tiger Electric’ powered by an IP67 compliant 25.5 kW natural cooling compact battery with 1/4th running costs against the traditionally used diesel. The innovative, high-quality battery of Tiger electric tractor can be fully charged with a regular home charging point in 10 hours, which reduces the effort of frequent travelling to petrol pumps for refuel.

MARKET SHARE OF TRACTOR COMPANIES IN INDIA IN 2020

FARM TRACTOR MARKET IN INDIA COMPANIES PROFILED

• TAFE (Tractors and Farm Equipment Limited)
• Escorts Limited
• Sonalika Group
• John Deere India Pvt. Ltd.
• Kubota Agricultural Machinery India Pvt. Ltd.
• New Holland Agriculture (a brand of CNH Industrial)
• Swaraj Tractors (a division of Mahindra & Mahindra Ltd.)
• Massey Ferguson (a brand of AGCO Corporation)
• Force Motors Limited (Tractor Division)

THISFARM TRACTOR MARKET IN INDIAREPORT WILL ANSWER THE FOLLOWING QUESTIONS

1. What are the projected growth rates for the Indian farm tractor market from 2024 to 2030?
2. How are government policies and initiatives expected to influence the farm tractor market in India during the forecast period?
3. What are the key technological advancements driving innovation in the Indian farm tractor market?
4. How are manufacturers addressing the challenges of sustainability and environmental impact in tractor design and production?
5. What role do electric and autonomous tractors play in the future of Indian agriculture?
6. How is the distribution network for farm tractors evolving to meet the needs of rural Indian markets?
7. What are the major factors influencing farmer preferences for specific tractor brands or models in India?
8. How are rental and leasing services shaping the adoption of farm tractors among Indian farmers?
9. What are the emerging trends in precision farming technologies and their impact on tractor sales and usage?
10. How do fluctuations in commodity prices and agricultural output affect demand for farm tractors in India?
11. What strategies are tractor manufacturers employing to address the needs of small-scale farmers in India?
12. How are digital platforms and e-commerce transforming the sales and service landscape for farm tractors?
13. What are the key challenges hindering the widespread adoption of farm mechanization in certain regions of India?
14. How do cultural and social factors influence farmer decision-making regarding tractor purchases and usage?
15. What opportunities exist for international players to enter and expand their presence in the Indian farm tractor market?
16. How are manufacturers addressing concerns related to product quality and after-sales service in the Indian tractor market?
17. What role does research and development play in driving innovation and product differentiation in the tractor industry?
18. How are demographic shifts and changes in land ownership patterns impacting the demand for farm tractors in India?
19. What are the implications of trade policies and tariffs on the import and export of farm tractors and related equipment?
20. How do weather patterns and climate change affect the demand for farm tractors and agricultural machinery in India?
21. What are the key considerations for farmers when selecting between new and used tractors in India?
22. How are financing options and credit availability influencing tractor purchases among Indian farmers?
23. What are the opportunities and challenges associated with the adoption of precision farming techniques in India?
24. How are tractor manufacturers integrating connectivity and IoT technologies into their products to enhance performance and efficiency?
25. What are the potential risks and benefits of autonomous tractors in the context of Indian agriculture?
26. How are changes in labor demographics and rural migration impacting the demand for farm tractors in India?
27. What are the key success factors for aftermarket services and spare parts sales in the Indian tractor market?
28. How are concerns related to data privacy and cybersecurity being addressed in the context of connected tractors and digital farming?
29. What are the implications of land tenure systems and property rights on tractor ownership and usage patterns in India?
30. How are industry players collaborating with academic institutions and research organizations to drive innovation and skills development in the farm tractor sector?