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Home Sectors Agriculture

Indian agri-machinery market CAGR at 6.4% to 2023

Fiinews by Fiinews
August 16, 2019
in Agriculture, Industry Sectors, Manufacturing, Projects, Technology
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Frequent innovation of equipment

John Deere

 

 

The Indian agricultural machinery market is expected to expand at a compound annual growth rate (CAGR) of ~6.40% from 2018 to 2023, according to a ResearchAndMarkets report.

It was valued at Rs.575 billion in 2017, said the report “Agricultural Machinery Market in India (2018-2023)” released 15 Aug 2019.

Frequent innovations in the designs and functions of agricultural equipment is the major driving force of the industry.

After the implementation of the goods and services tax (GST), agricultural equipment like tractors and drip irrigators were put under the 12% tax slab, and agricultural implements, which includes plow, threshers, axes, and powrahs, were put under the 28% tax slab.

The imposition of these taxes has put extra pressure on Indian farmers, thus affecting their productivity.

TAFE Motors and Tractors Limited, John Deere India Private Limited, Mahindra and Mahindra Limited, CNH Industrial (India) Private Limited, and Escorts Limited are some of the major players operating in the market.

The tractor segment had the largest share (~81%) of the market in FY 2017. Continuous efforts by the government to hasten the adoption of mechanization, by making tractors affordable, has resulted in a significant rise in the demand for these equipment.

Apart from tractors, ~19% of the market share had been acquired jointly by rotavators, threshers and power tillers, in FY 2017.

Among the major manufacturers of agricultural equipment in India, Mahindra & Mahindra had the largest market share (~41%) in FY 2018, followed by Tractor and Farm Equipment Limited (~20%).

Mahindra & Mahindra has been able to acquire the largest share in the Indian agricultural machinery market owing to its affordable pricing and easy availability of spare parts in different parts of the country.

The Indian government’s commitment towards rural development through agro-mechanization is likely to boost the agricultural machinery market in India.

Also, government subsidies and low import duties on agricultural equipment have made such heavy machinery affordable for farmers, thus increasing sales volumes.

Large scale migration from rural to urban areas has led to a shortage of labour in the farming industry.

Therefore, to fulfil the rising demand for agricultural products by the growing Indian population, farmers are forced to use automatic machinery that ensure high productivity, in less time, with limited human effort.

Key deterrents to the growth of the market:

In India, the average farm size is less than two hectares. It is difficult for farmers to use heavy equipment on such small farms. As a result, the demand for agricultural machinery is limited to farmers who have larger pieces of land.

Despite large-scale mechanization, most of the agricultural operations in India are still carried out through traditional tools like sickle, wooden plough, etc., owing to small per-farmer land-holdings. Also, aftersales service of firm equipment is poor in the country, mainly due to the unavailability of adequate service centers. These factors together, deter the growth of the agricultural machinery market in India.

Companies covered in the report are: Escorts Limited, Force Motors Limited, Greaves Cotton Limited, Mahindra & Mahindra Limited, Shivagrico Implements Limited, VST Tillers Tractors Limited, CNH Industrial (India) Private Limited, International Tractors Limited, John Deere India Private Limited and TAFE Motors and Tractors Limited. fiinews.com

Tags: CNH Industrial (India) Private LimitedEscorts LimitedForce Motors LimitedGreaves Cotton LimitedInternational Tractors LimitedJohn Deere India Private Limited and TAFE MotorsMahindra & Mahindra LimitedResearchAndMarketsShivagrico Implements LimitedTractors LimitedVST Tillers Tractors Limited
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Fiinews.com features through news articles on business opportunities in the Indian market for the benefits of foreigners. It is also a platform for international businesses to showcase through elaborate articles on their products & services to the Indian consumers and corporations exploiting industrialisation of the country.

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