41-50 HP Tractors Dominate Indian Agricultural Machinery, Tractor Market Experiences Rise in High HP Demand

The Indian tractor market is undergoing a profound transformation as it witnesses a remarkable surge in the demand for high-horsepower (HP) tractors. Recent years have seen a steady increase in the market share of high HP tractors, primarily driven by factors such as the rising purchasing power of farmers, farm consolidation, and the growing need for enhanced farm power per hectare. Additionally, the substitution of manual and animal labor with mechanization is contributing to the structural shift towards higher HP tractor sales.

According to industry experts, the domestic tractor market has witnessed a gradual shift from 31-40 HP tractors to the more robust 41-50 HP category over the past few years. In a significant development, the share of 41-50 HP tractors has surged from 47 percent in FY18 to an impressive 54-55 percent in FY23.

Hemant Sikka, President of the Farm Equipment Sector at Mahindra & Mahindra Ltd., noted, "With tractors serving as the prime mover, the shortage of manpower has led to an increased adoption of various farm machinery for agricultural activities, thereby driving the demand for higher HP tractors."

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The 41-50 HP tractor segment has witnessed substantial growth, boasting a Compound Annual Growth Rate (CAGR) of approximately 9 percent over the past five years. In contrast, other tractor categories have experienced growth rates ranging from 0.5 to 4.6 percent. In FY23 alone, an impressive 5.2 lakh tractors were sold in the 41-50 HP segment, out of a total of 9.45 lakh tractor units.

Hemal Thakkar, Senior Practice Leader-Consulting at CRISIL Market Intelligence & Analytics, emphasized, "Farmers are increasingly recognizing the benefits of mechanization, which translates into higher productivity due to the expanded use of equipment, in conjunction with tractors. The growing trend of collaborative farming, increased commercial utilization, and higher irrigation intensity further boost the demand for higher HP tractors."

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Interestingly, tractors are no longer confined to just farming activities. They have diversified their applications into mining, construction, and haulage, underscoring their versatility. Approximately 30 percent of the overall tractor demand now comes from non-farming usage, and this percentage is expected to rise, fueling a positive trajectory in tractor demand, according to a report by CareEdge.

In response to the shifting market dynamics towards high HP products, leading companies such as VST Tillers & Tractors, traditionally strong in the small farm equipment sector, are gearing up to launch new products in the high HP segments. VST is set to introduce at least three new high-HP products in the market shortly.

Escorts Kubota is also entering the fray with its new World Maxx series in Farmtrac, aimed at repositioning itself in the premium 50 HP and above segment.

Furthermore, the introduction of TREM-IV emission norms in January 2023 for tractors with more than 50 HP may have contributed to the shift in the HP-wise product mix, with the 41-50 HP segment gaining prominence at the expense of the above-50 HP segment.

As the Indian agricultural landscape continues to evolve, the tractor market's focus on higher HP machines demonstrates the industry's commitment to meeting the changing needs of farmers and various sectors beyond agriculture. This shift promises increased productivity, efficiency, and sustainability in India's vital agricultural sector.

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