Tractor Industry

Tractor industry plays an important part as agriculture sector has a major contribution to India Avinash Mahajan 08-Apr-11

INTRODUCTION More than 70% of Indian Population is involved with agriculture. Indian Farmers and small entrepreneurs always want to buy tractors. Good tractors can save a lot of time in agriculture activities. Tractors can do multipurpose jobs in agricultural and transport activity. Tractors run on any type of road. Tractors are most required vehicle by farmers. The cost of tractors in India is in the range of Rs 3,50,000 ( Rs 3.5 lakh) to Rs 6,50,000 (6.5 lakh). Latest Price of tractors is dependents on the accessories (tractor parts and farming equipments) with tractors. Without any accessories Tractor price in India is approx. 2.5 lakh Tractor industry plays an important part as agriculture sector has a major contribution to Indias GDP. Tractors are part of agricultural machinery industry. Tractors came to India through imports and later on were indigenously manufactured with the help of foreign collaborations. The manufacturing process started in 1961-62. Indian tractor industry is relatively young but now has become the largest market worldwide. There are currently 14 players (manufacturer) in the industry. Mahindra & Mahindra is the leading player in the industry. Monsoon season is a key driver for sales of tractors. A series of good or bad monsoon affect the sales. 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 penetration level in India is very low as compared to the world standards (other countries). 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. The medium horse power category tractors, 31-40 HP, are the most popular in the country and fastest growing segment. How Tractor Industry Came in India As part of the promotional measures, undertaken by the Department of Scientific and Industrial Research, for upgradation of imported technology, the study, on technological status, of the tractor industry was undertaken under the National Register of Foreign Collaborations. This involved sending questionnaire, to all Indian tractor manufacturing units, leading foreign producers, technology suppliers and visits to all the tractor manufacturing units, in the country, for personal discussions, in order to obtain, detailed, technical and other information, about the source of technology, general performance and, their present technological status The report was compiled, on the basis of the data collected during the visits and, information received, in replies to the questionnaire. The draft study report was discussed, by an evaluation committee and, a revised draft was discussed, at a workshop, held in October, 1988.

INDIAN TRACTOR MARKET DESCRIPTION UNITS WORLD Arable Land Mn Hectare 1444 Mn hectare in world 170 Mn hectare in world India Rank 2nd Irrigated Area Mn Hectare 249.6 Mn hectare in world 45.8 Mn hectare in world India Rank 2nd Tractors In Use Tractors/1000 Hectares 28 in world 10.5 in India India Rank 8nd

TOTAL/AVG

INDIA

INDIA RANK

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.

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. MANUFACTURERS AND COLLABORATORS COLLABORATON MANUFACTURER Eicher Tractors Ltd Gujarat Tractors Ltd TAFE Escorts Ltd Gebr, Eicher Tractor. West Germany Motokov -Praha. Czechoslovakia Messey Ferguson. UK MoloimportArazawaZakladyMechaniczne .Ursus Poland 1961 1963 1961 1964 YEAR

Mahindra And Mahindra Escorts Tractor Ltd Hindustan Machine Tools Kirloskar Tractors Ltd Punjab Tractor Limited Harsha Tractor Ltd Auto Tractor Ltd Vst Tillers United Auto Tractor Ltd Larsen And Tourbo Ltd New Holland Tractor Greaves Ltd

International Harvestor. UK Ford .U.K. Motokov -Praha. Czechoslovakia Klochner-Humboldt Deutz. Germany CMERI.INDIA Moto Import. Russia British Leyland. U.K. Mitsubishi. Japan UzinaTractorul. Romania John Deere. USA New Holland Tractors .Italy Same Deutz- Fahr. Italy

1965 1971 1971 1974 1974 1975 1981 1983 1986 1999 1999 1999

DEVELOPMENT AND GROWTH OF THE Indian TRACTOR INDUSTRY 14 tractor manufacturing units are there in production, out of which, 10 were set up with foreign collaboration and, 4 with indigenous, technology and know-how. The actual development, of the tractor industry, has taken place, over 2 decades, beginning from 1960. In the first decade, the, following, five units were set up, all with foreign collaboratioan

The annual production, of tractors, in the year 1987-88 had reached almost 90,000 nos, per annum. Out of, the above, 14 units which were in production, seven units, (Eicher, TAFE, Escorts, Mahindra & Mahindra, Escorts Tractors, HMT and Punjab Tractors), accounted for 99% of the tractor production, while, the rest of the six units, shared, between them, the remaining 1 %. Long term growth, of the tractor units, appears to have been, primarily, dictated, by approach of the local management rather than, the collaborators, or the technology, or the model of the tractors selected there are successes and failures, in units with: (1) Both imported and indigenous technologies (2) Technologies imported, both from western and eastern block countries (3) Units belonging to both, public and private sectors (4) Both, where well known, or, less known, models were selected, for local manufacture

LATEST DEVELOPMENTS IN TRACTOR TECHNOLOGY ABROAD The recent developments, in tractor technology, that have taken place abroad,are not always relevant under Indian conditions Some of the developments, for instance, those which aim at increasing driver comfort, making tractors suitable for large land holdings etc, are not necessarily appropriate under Indian ConditionsMore sophistication means higher price which may not be acceptable to the local farmers. On the other hand, developments such as those aimed at improving fuel economy and, those aimed at improving, reliability, ease of operations, are suited to the Indian conditions. Tractor engines: Developments, relating to the engines, are: improvement in fuel efficiency, which is important for us also and turbocharging of engines, to reduce the weight, of the engines, which is not relevant under local conditions, as, turbocharger is a delicate high speed mechanism which is difficult to maintain and, requires careful operation. Development aimed at increased life of critical engine parts, such as the use of ceramics, substituting diesel fuel, wholly or partially, by fuel like compressed natural gas, may be suitable to Indian conditions. Transmission and final drive: The developments relating to transmission system are: i) More number of gears and, higher maximum speed, ii) Synchronies gears iii) Hydrostatic hydrodynamic transmission iv) Four wheel drive The developments listed at iii, &iv are not quite suitable to Indian conditions, where unlike in the advanced countries, high initial cost of tractors, employing these features, may not be acceptable

to farmers. There is however, scope for increasing the haulage speed, up to, a maximum of 40 Km/hr.

Hydraulic system: Hydraulic system, of implements control, is now well developed in India Electronic sensing devices have now come into use, abroad, for sensing movement of the linkages draft load and depth of operation This is being developed, by some units, in the country now a days in India as well. Steering system: Hydraulic or power steering is now common, on tractors abroad This is a useful development which reduces the turning effort ZF steering have taken up their manufacture in the country and this would be available to the tractor manufacturers However, its application may be limited on tractors because of its extra cost. Size and weight of tractor: In some of the advanced countries, particularly, (ISA there is a trend for using higher H.P. tractors, the current popular size being 100H.P. Efforts are also being made to reduce the weight of the tractor. These are not relevant under local conditions, because of the small land holdings of the farmers, which cannot sustain a higher priced tractor and weight is not a problem for those tractors, which are mainly used for dry land cultivation There may be a need to develop low weight models for wet land cultivation in India What are the key drivers for the Indian tractor market? The tractor industry has a certain cyclical nature and depends heavily upon what happens in the general rural economyinvestments by the government, monsoons and availability of credit at affordable rate. Over the last few years, the government has been encouraging the extension of rural credit. Last year, the target was at Rs 2.8 lakh crore, which has been boosting the growth. In the last six years, the tractor market has grown by 89%. For FY09, the domestic.market was about 3,04,000 tractors compared with 1,60,000 tractors in 2003. The year (FY09) saw a pretty good first half at a time when commodity prices were going up; lot of high minimum support prices and big credit waiver was announced by the government. However, then came the global meltdown and its impact on India. There was a general economic drop in sentiments despite a third consecutive great monsoon last year. The banks clamped down on credit as they were worried. And since 80%-85% of the tractors are bought on loan, making credit available at affordable interest rates is crucial. The industry took a hit. It ended with almost a flat growth. How is the performance of export market? There has been an overall drop of 20% in the exports of the industry. Our exports to US, too, were majorly hit. However, in the long run the US is a strong market. Our focus will remain on markets including the US, China and Africa.

Which range of tractors is expected to see major growth? Any new launches planned? T he fastest growth in the above 50 horse-power (hp) segment and plan to introduce tractors in this range. The tractors are classified into less than 30 hp, 30-40 hp, 40-50 hp and above 50 hp. India have tractors up to 75 hp. Also,companys are modernising and improving our range of 30-40 hp tractors. Companysare working on launching below 30 hp tractors which offer very good value for money. In the below 30 hp segment, there is a small Chinese tractor in field testing. We have also launched bio-diesel tractors in Maharashtra and have CNG tractors ready for the market

RECOMMENDATIONS Because of, the expensive and time consuming, steps required for developing original design of tractors and, introducing them in the markets, entrepreneurs choose the easier option of importing the designs. Suitable incentives, for indegenous development, of new tractor model, should be provided. This is necessary to encourage R&D, in tractors, in India Development of accessories: Development of accessories, for the following operations needs encouragement: i) Potato planting and harvesting ii) Rice transplanting iii) Sugarcane harvesting