India Tractor Market - Industry Analysis & Forecast 2022-2028

MARKET INSIGHTS

The India Tractor market was valued at 614.5 thousand units in 2021 and is expected to reach 910.8 thousand units by 2028, growing at a CAGR of 5.78%. The increasing adoption of precision farming is driving the Indian agricultural tractor market. The focus on agricultural mechanization in developing countries, rising demand for tractors, and the growing sense of accurate farming will boost India's demand for technologically advanced tractors. India constitutes a significant figure in the tractor market share in the world.

There has been a significant increase in precision farming in India, which is a good sign for the India agricultural tractor market . Precision farming is crucial, involving the use and transformation of structured data to provide operational agricultural insights that can effectively save resources and labor and lead to higher productivity. Several OEMs are shifting focus from matured markets of the northern region to underpenetrated southern region states. The Indian tractor market is currently growing, and manufacturers are looking for capacity augmentation in the country.

The following factors are likely to contribute to the Indian agricultural tractor market growth:

• Increasing Focus on Remote Monitoring Technology in Tractors
• Growing demand for autonomous tractors
• Growing farm mechanization
• Increasing adoption of precision farming
• Augmented Financial Support to Farmers Through Loans and Subsidies

KEY DEVELOPMENTS IN THE MARKET

• There is an increasing presence of agriculture-focused NBFCs in the country. These corporations enable small and medium-scale farmers to buy agriculture machinery for their farms on credit, driving the farm tractor market in India.
• Women in the country are emerging in several roles such as laborers, cultivators, and agri- entrepreneurs, driving the tractor industry in India.
• Growth in agricultural productivity and exports in the country empowers farmers to invest in agricultural machinery in India. This will help drive the tractor industry in India.
• The increasing adoption of precision farming is driving the Indian agricultural tractor market share. A new pay-per-hour type of custom hiring is emerging in the tractor business, fueling tractor growth. This will promote the key factors influencing the agriculture sector while benefiting farmers.
• The demand for high-power tractors mainly comes from large farmers and government institutions focusing on the tractor rental market.

INDIA TRACTOR MARKET TRENDS & GROWTH ENABLERS

Increasing Popularity of Remote Monitoring Technology in India Tractor Market

A new frontier of innovation is emerging as a combination of agriculture with digital technologies, opening various paths to a smart agricultural future. For instance, in early 2018, New Holland announced a self-driving tractor. With self-driving and GPS-enabled tractors, farmers can program routes to navigate the field. Self-driving or autonomous tractors would help farmers reduce labor hours. However, there is an enormous potential for data monitoring in the product.

Increasing Financial Support to Farmers through Loans and Subsidies

The government of India has launched several policies and missions, which are targeted to help farmers by providing them with financial assistance, better infrastructure, competitive crop prices, loan waivers, and subsidies. The government has also been keen on improving the current state and adopting farm mechanization in India. Currently, the farm mechanization rate is close to 40% in India, which is the lowest considering the role and importance of agriculture in the country.

MARKET SHARE & SEGMENTS

The 41-60 HP Segment has Generated the Highest Sales

The increased use of tractors in the power range of 41-60 HP is due to their ability to effectively carry out all tasks in the field, including soil preparation, irrigation, weeding, harvesting, and haulage. These farm tractors have the power to perform the required farming tasks and are also used in several other ways, such as operating generators for irrigation and running both company and domestically-made harvesters and threshers. The labor shortage and reducing agriculture production costs have triggered the demand for this segment in the Indian market.

2WD Tractor Dominated the Indian Market

Ease of driving and maneuverability during light loads and plain fields are major factors boosting the demand for two-wheel-drive tractors. Older farmers majorly use 2WD tractors as they are skeptical about using new machines and are more comfortable with traditional 2WD tractors than 4WD tractors. Popular brands including Kubota, John Deere, New Holland, and TAFE are the preferred choices among farmers in the 2WD segment in India. India has many small farmers, with an average farm size of 3.6 ha/farm. For this reason, farmers prefer to own small and cost-efficient machines, which positively impacts the 2WD segment.

Diversifying Product Portfolio is the Need of the Hour

• From a demand perspective, vendors dependent purely on a single product category or on one or two end-users are expected to face more challenges. The need of the hour is to diversify their product portfolio.
• In terms of units sold, Mahindra and TAFE were the top-selling tractor brands in India.
• Mahindra has acquired two companies, Hisarlar and Erkunt Traktor Sanayii, to gain access to the farm equipment market and expand to European countries by enhancing production capabilities in Turkey.
• Vendors must distinguish their products and service offerings through a clear and unique value proposition. Otherwise, they may not survive the highly competitive Indian agriculture tractor market.
• As the scope of farm mechanization has started to include other mounted and self-propelled agricultural machinery, the sale of tractors in the developed market is likely to remain stagnant if not decline.

Northern India Leads the Country in the Adoption and Penetration of Farm Mechanization Practices

Punjab has the highest penetration and adoption of modern agriculture equipment. Uttar Pradesh closely follows the mechanization rate and leads in the number of tractors sales in India in 2020-21.

In the western zone, Madhya Pradesh is emerging as a potential market for new tractors and advanced agriculture tools. This can be attributed to the fact that the state has achieved over 14% growth in agriculture. The penetration of tractors and agricultural implements is significantly less in north-eastern states. The north-eastern region, a group of seven states, has Assam as a leader in the number of new tractor sales and leads the other six states by a hefty margin.