Factors driving Export of Tractor’s Industry

While India's automotive industry has suffered since the Covid outbreak last year, the tractor industry has remained stable. The rural economy's long-term viability is aided by abundant monsoons, high agricultural yields, and exports, and the sector is progressively increasing.

Exports contribute for 10% of the income generated by India's tractor industry. In the previous 18 months, tractor exports have skyrocketed, with India selling 11,760 tractors in August 2021, one of the highest monthly sales ever.

Gaurav Saxena, President and CEO-International Business, Sonalika Tractors, recently stated at the ETAuto Farm Equipment Summit, "For the previous year and a half, the trend of increase in tractor exports has been witnessed in Europe and America where our volumes and demand has gone above expectations."

For the past ten years, Sonalika Tractors has had manufacturing facilities outside of India and has been exporting tractors. Saxena stated, "The importance of exporting in a corporation is as follows: “If something happens in the Indian market, another country’s sales can support the business. As a result, having an export business and not being overly reliant on one market is usually a smart idea."

Current Scenario - The total volume of the tractor industry, including domestic and foreign sales, is currently around 2 million units. Aside from India and Europe, the US, Brazil, Turkey, and Thailand also have considerable quantities.

Farms in India are shrinking as the population grows, and families have divided the farms among themselves. Farms outside of India, on the other hand, are vast and follow corporate farming practises. As a result, larger machines are being used. As a result, they require greater technology, more comfortable cabins, and tractors with air conditioning. Farm Machinery companies have seen a lot of growth as a result of such products.

In five years, it is estimated that this export market will increase to over 2 lakh tractors, which is nearly double the current levels.

Growth in Exports –

• Support from the government for agriculture in countries where farm mechanisation and food security are more important.
• Another factor contributing to the growth in exports could be the tractor's unique range. In India, tractors of 30 to 60 horsepower (HP) are the most popular, with 30-60 HP tractors being the most popular. On the other hand, export demand ranges from 30 to 60 horsepower.

Many manufacturers have built skills and product lines that are acceptable for markets outside.

• Electrification and technology: Electric and robotic tractors are gaining popularity. However, because the terrain is extremely different for tractor use in India, electrification in the farm sector would take longer than in the auto industry.

The demand for e-tractors and agricultural gear is expected to rise in the future years. Many companies are working on this in India because it must eventually reach all markets.

• It is critical to adopt the appropriate items and adapt them to the Indian market. Electric drives from Europe cannot be simply plugged in and played in the price-sensitive Indian market. This also necessitates a high level of localization; therefore, it will be a 2–3-year journey, but progress must be made.

Challenges associated –

• The tractor sector faces a significant problem as raw material costs rise. Because of the scarcity of containers in some export markets, logistics costs have increased tenfold. As a result, the farmer who is a rural buyer pays a very high price for the finished product. This is placing a lot of strain on every company's bottom line.
• Chip shortages, which have impacted a substantial percentage of the auto industry, are a problem in some regions, such as Europe and Tier-4 markets in the United States and can affect us also.
• To avoid excess capacity becoming a cost, it's necessary to take reasonable risks when adding capacity. When it comes to pricing, we must also be cautious. We shouldn't make all of the technological advances merely to keep the prices of agricultural products low.