Introduction

Indian tractor industry is relatively young, as manufacturing process of tractors started in

1961-62. But now has become the largest market worldwide. 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 mainly used in
agriculture. 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, have expanded at a spectacular pace during last four decades. The arable
land in India is high as 12% of the total arable land in the world. Tractor market in India is
about Rs 60000 million. 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 in India.

Growth of tractor industry in India

Mahindra & Mahindra is the leading player in the industry. Monsoon season is a key driver
for sales of tractors. In recent years the industry has registered a good growth in sales, both
domestic as well as exports. This is also partly because of the initiative of the government to
boost up agriculture and agricultural machinery industry. The tractor industry reported a
strong 28.3% growth in sales volumes. The medium horse power category tractors, 31-40 HP
are the most popular in the country and fastest growing segment. There are currently 14
players in the industry including two major international players i.e. John Deere and New
Holland.

Major players and their market share

Market share
Mahindra Tractors
Indian tractor industry has 13 national and few
6%3% TAFE regional participants. The market share is
9%
9%
38%
Escorts however, concentrated amongst the top six
10% John Deere manufacturers, accounting for over 90% of total
ITL volumes
25%
New Holland
Others

Mahindra Tractors – it is the highest selling tractor with the market share of 38%. It is the
largest manufacture in India and has the capacity to build 150000 tractors per year. Mahindra
Tractors sold about 85,000 units annually making it one of the largest tractor producers in the
world. Mahindra purchased 100% of Gujarat Tractors from the Government of Gujarat and
Mahindra purchased a 64.6% stake in Swaraj in 2004.
TAFE - TAFE combined market share is 25% and a combined volume of about 53000
tractors. It already have large number of products and variants to suit the changing demand
patterns of tractors across the country. With its major focus being on the tractor business, it
aspires to be the number one player in the domestic market and the growing presence in the
international market.
Escorts – it is the third largest selling tractor with the market share of 10%. Its total
production is around 33000 per year.  Escort manufactures produces construction and
agriculture tractors in the 08-75 HP range and has already sold over 600,000 tractors.
John Deere – it has the market share of 9%. In 2005, Deere & Company acquired nearly all
the remaining shares in this joint venture and its total production is around 20000 per year. In
2008, Pune factory started to produce new 55 to 75 HP 5003 series tractors for European
market
ITL - it has the market share of 9%. Its integrated tractor manufacturing plant at Hoshiarpur
has a capacity to produce 3 lakh units per annum. The company produces tractors in a range
from 20HP to 120HP and has presence in more than 80 countries.
New Holland - it has the market share of 6%. With 18 plants spread globally, as well as six
joint ventures in the Americas, Asia, and Middle East, the corporation is present in 170
countries worldwide

Industry growth rate and turnover

 The tractor industry has bounced back to a

record high of 711,478 units with a 22 per
cent growth from the previous year,
during 2017-18
 The expectations are that the domestic
industry will be posting a growth of
around 10-12 per cent during this year.

 The industry growth is triggered by various factors including that the monsoon is
expected to be good; there is water available in the reservoir; the Gross Domestic
Product (GDP) is also growing well and infrastructure growth is happening..
 The industry is expected to reach around 7, 85,000-7, 95,000 tractors in the domestic
market this year.
 By the time 2022 arrives and the Prime Minister's promise on doubling the farm
income happens, the industry is expected to cross one million tractors.
  Domestic tractor sales grows by 27.5 % as against Domestic Industry growth
of 11.2%
 Tractor exports grow by 28.2 % as against Industry exports growth of 12.8 %

Government support for Tractor Industry

Although agriculture contributes just around 20% to India’s GDP, it provides employment to
a large rural population, which is why the sector remains a strong focus area for the
Government. The tractor industry benefits significantly from the Governmental focus on
agriculture, with measures such as nil excise duty on tractors (even the excise duty on tractor
parts has been lowered from 16% to 8%) and inclusion of tractor financing under priority
sector lending (by PSBs) serving as long-term demand drivers. Financing of tractor purchase
is of great significance for the industry, it being a key demand facilitator