By S.M. Boothem

In the automotive sector, the sale of tractors is not only leading the recovery process (since June 2020), but is also giving good growth momentum to the industry. Farm income levels have improved due to better yield and prices. The positive trend for tractors is expected to continue through the festive season. 

India is the world’s largest manufacturer of tractors. It is also the world’s largest tractor market. Mahindra Group (with Swaraj Tractors) has the largest share of the Indian tractor market, with other leading tractor makers, such as TAFE, Sonalika, Escorts and John Deere also offering their products. These top five players together hold the biggest market share. The leader in the tractor segment, Mahindra & Mahindra’s (M&M), farm equipment sector sold 42,361 units in September 2020, as against 36,046 units during September 2019. “Our sale of 42,361 tractors in September 2020 shows a growth of 18 per cent over the previous year,” says Hemant Sikka, president, farm equipment sector, M&M. “Retail demand continued to be buoyant backed by a good monsoon, higher kharif acreage and continued government support, including higher MSPs for key crops.”

As per the first advance estimate of production, the kharif output is set for another record performance. This year’s production is estimated to be 5 per cent higher than last year’s and 17 per cent higher than the normal. High output may lead to a drop in prices. According to Mahindra officials, starting with single digit growth in May 2020 followed by double digit growth in all subsequent months, tractors witnessed healthy demand during the kharif harvesting season (supported by good monsoon and higher cash flows with timely procurement of rabi crop). However, issues due to localised lockdowns, manpower and working capital-related constraints, crippled the supply side situation and hampered the availability of tractors. The company expects normalcy to return in October. It is also ramping up production. 

Positive impact

In its September 2020 report, India Tractor Market: Global Industry Analysis and Forecast till 2030, P&S Intelligence, claims that the Indian tractor market is expected to witness considerable growth in the coming years, buoyed by the increasing farm mechanisation rate, along with the rising construction activities driven by urbanisation. In addition, the surging investment by leading tractor manufacturers in the country is expected to positively impact the market during the forecast period (2020–2030).