Tractor Industry in India

By

Dr. Prachi Singh

Disha Institute of Management and Technology (DIMAT)
Raipur, (C.G.)
 

Higher productivity and greater output are the two major contributions in farm
mechanization. Tractors form an integral part of farm mechanization and have a crucial role
to play in increasing agricultural productivity. Tractor is a highly versatile piece of machinery
having a multitude of uses, used in agriculture both for land reclamation and for carrying
out various crop cultivation and also employed for carrying out various operations connected
with raising the crops by attaching suitable implements and to provide the necessary energy
for performing various crop production operations involved in the production of agricultural
crops. Tractors are capital intensive, labour displaying used as a mode of transport, in
electricity generation, in construction industry and for haulage operation. It has now
become an integral part of farm structure .The application of tractor for agricultural
activities which swept India during the last twenty years have erased the problem of
farmers. Farm mechanization program in India aims to integrate the use of available human
and animal farm power with mechanical sources of power for increasing the productivity.

Indian tractor industry, comparatively young by world standards have expanded at a

spectacular pace during last four decades. Consequently it now occupies a place of pride in
India's automobile industry. U.S.A., U.S.S.R. and only a few Western European countries
exceed the current production of tractors in India, but in terms of growth India's growth is
unmatched even with countries of long history of tractor manufacturing. The spectacular
achievement reflects the maturity and dynamism of tractor manufacturers and also the
policies adopted by the government to enable it to effectively meet the demand. The tractor
industry in India has made a significant progress in terms of production and capacity as well
as indigenisation of technology. It is a typical sector where both imported technology and
indigenous developed technology have developed towards meeting the overall national
requirements. The global spotlight on tractors manufacturers certainly in terms of volume
seems to be swinging away from the USA, UK and Western and Eastern Europe towards
India where growth in the number of producers and the total volume in recent years have
been impressive. In India tractor industry has played a vital role in the development.

India's gross cropped area is next only to United States of America and Russia and along
with fragmented land holdings has helped India to become the largest tractor market in the
world. But it drops to eight position in terms of total tractor in use in the country when
compared to international figures, only 3% of total tractors used all over the world . It is to
be noted that while the overall automobile industry is facing recession the tractor industry is
growing at 9%.About 20% of world tractor production is carried out in our country only. The
arable land in India is high as 12% of the total arable land in the world. Tractor market in
India is about Rs 6000 crore. On an average around 400000 tractors are produced and their
sale is 260000.Uttar Pradesh is the largest tractor market in our country. One out of every
four tractor is being purchased here. Indian tractor market has to be viewed considering its
position in the world with respect to key parameters as given below:
INDIAN TRACTOR MARKET

DESCRIPTION UNITS WORLD TOTAL/AVG INDIA INDIA RANK

Arable Land Mn Hectare 1444 170 2
Irrigated Area Mn Hectare 249.6 45.8 2
Tractors In Use Tractors/000 Hectares 28 10.5 8

The Tractors available in developed countries have advanced features and accessories that
is not found in Indian tractors .Tractor industry has made a steady and satisfactory progress
even in drought areas. Four factors have contributed to the steady progress:

* Government laid stress on the mechanization of agriculture with a view to boost food
grain production. Therefore agriculture sector started receiving financial assistance.

* There is an increase in awareness among the farmers for the need of farm mechanization
and are keen to acquire tractor with the help of credit facilities from financial institutions.

* Agronomists believe that there is need for more tilling due to depletion of moisture and
repeated cultivation of land .It is precisely for this reason that the demand for tractors was
well maintained even during a draught period.

* Animal power available is too inadequate to meet power demand of our farmers.
Mechanized operations are preferred to eliminate drudgery and delay, also labour shortage
during harvesting increased the use of tractor.

At the end of the day there are enough reasons to believe that the industry will grow
because:

* More farmers are opting for multiple cropping over last decade. Country's net cropped
area had remain virtually stagnant while gross cropped area increased by about 4.7% .This
indicate the  increased popularity of multiple cropping.

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

* Irrigation facilities reduce reliance on the monsoon and allow for quick yielding varieties of
food -grain .This reduces the cropping cycle to 3-4 months from the traditional 5-6 months.
Reduced cropping cycle require deep tilling which translates into higher demand for tractors.

* Cost of tractors in India is the cheapest in world .The cost of a finished tractor here is as
much as the cost of gear box in developed countries. Hence there exists tremendous scope
for exports.

* According to a study conducted by PHD Chamber of Commerce and Industry ,

Since purchase of tractor involves a big investment its demand in affected by the
availability and easiness of credit. A higher availability of credit will lead to a higher
demand for tractors .

* The tractors between the 31-40 horse power  and 31-40 hp range dominate the
market .The reason for medium horse power  tractors being more popular is that the
major tractor demanding states like Punjab Haryana and Uttar Pradesh have plenty
of alluvial soil which do not require deep tilling. Lately it is visualised that higher hp
 segment has the maximum growth potential Higher horse powered tractors will be
the future requirement with the government intention to encourage contract farming
through the leasing in and leasing out of farm lands.

* Regarding exports India of latter has been exporting tractors to a number of

countries, but predominantly to Srilanka ,Nepal and U.S.A .However the study
reveals that exports from India are going down in the recent years .The major
reason for the decline in exports of tractors of tractor from India is being the failure
to find an extensive market overseas ,deteriorating foreign exchange situation in
African countries and their poor buying capacity, comparatively cheaper imports of
second hand tractors by South East Asian countries from developed countries and
the disintegration of erstwhile U.S.S.R. but also  the potential export markets  can be
explored by Indian in the future. Since Indian tractors confirm to the international
standard by virtue of their foreign collaboration it is possible for India to export to
more tractors to the rice and wheat growing countries like Canada, Philippines and
Bangladesh.

* FOREIGN COLLABORATION

Tractor industry along with others benefited from this policy which allowed free inflow of
foreign technology .The manufacture of tractors started in India mainly with the help of
foreign collaboration secured from internationally reputed companies from the USA ,UK,
USSR ,WEST GERMANY, POLAND ,CZECH SLOVAKIA . Most of the models which were
taken up for manufacture in India were developed overseas. Soon after the decision for the
manufacture of tractors was made during second plan, government approved number of
foreign collaboration agreements. The establishment and present status of tractor industry
owes a great deal to the support received by the Indian entrepreneurs from foreign
collaboration during the initial phase of manufacture.

DSIR has introduced a scheme, "National Register of Foreign Collaborations", which

envisages review and analysis of imported technologies in the country and suggested
measures for appropriate choices acquisition and implementation of foreign know-how.
Major objective of scheme is:

* To undertake financial, economic and legal analysis of set of data on foreign collaboration.

* Carry out a technological analysis of the imported technology and provide a stage of art
technology in the country and status of implementation of collaboration.

* Co-ordinate with Ministry of Industry, Commerce and Finance by providing technology

data input.

* Selective support to strength measures in Research and Development for technology

absorption.

List of tractor manufacturers, their collaborators and the year of commencement of

production:

MANUFACTURERS AND COLLABORATORS

TABLE 4:
MANUFACTURER COLLABORATOR YEAR
Eicher Tractors Ltd Gebr,Eicher Tractor. West Germany 1961
Gujarat Tractors Ltd Motokov -Praha. Czechoslovakia 1963
TAFE Messey Ferguson. UK 1961
Escorts Ltd Moloimport Arazawa Zaklady Mechaniczne .Ursus Poland 1964
Mahindra And Mahindra International Harvestor. UK 1965
+Escorts Tractor Ltd Ford .U.K. 1971
Hindustan Machine Tools Motokov -Praha. Czechoslovakia 1971
*Kirloskar Tractors Lmt Klochner-Humboldt Deutz. Germany 1974
Punjab Tractor Limited CMERI.INDIA 1974
*Pittie Tractor Limited Own know-how 1974
*Harsha Tractor Ltd Moto Import. Russia 1975
*Auto Tractor Ltd British Leyland. U.K. 1981
**Pratap Steel Rolling Mill Own know-how 1983
Vst Tillers Mitsubishi. Japan 1983
*United Auto Tractor Ltd Uzina  Tractorul. Romania 1986
*Asian Tractor Ltd Own know-how 1989
Bajaj Tempo Ltd Own know-how 1987
International Tractors  Own know-how 1998
Larsen And Tourbo Ltd John Deere. USA 1999
New Holland Tractor New Holland Tractors .Italy 1999
Greaves Ltd Same Deutz- Fahr. Italy 1999