For The Second Year In A Row, Tractor Output Exceeds 1 Million In 2022

For the second year in a row, the number of tractors produced each year in 2022 was over a million, but this was 6% less than the previous year. Despite a strong base effect, domestic sales increased slightly. In 2022, exports increased by 6%, reaching their highest level in history.

Tractor demand in the local market remained strong in 2022. This was aided by farmers having a lot of money because the monsoon was better than usual, and exports continued to grow. This comes on the heels of a record-breaking sales year in 2021.

Domestic tractor output totaled 1,004,976 units in 2022, up from 1,065,280 units in 2021, the highest-ever yearly total.

Total domestic sales increased slightly to 912,061 units in 2022, up from 903,724 units in 2021, according to data released by the Tractor & Mechanization Association (TMA). Meanwhile, exports increased by 6% to 131,850 units, the highest annual export total in history, up from 124,901 units in 2021.

Hemant Sikka, President of Mahindra & Mahindra Ltd.'s Farm Equipment Industry, stated that attitudes in the farming sector remain positive, resulting in robust demand for tractors and farm tools. Mahindra & Mahindra, India's leading tractor manufacturer with a little more than 40% market share, forecasts a 4% increase to 371,848 units in 2022, up from 359,417 units in 2018.

'Farmers are gradually realizing that farm mechanization is the way forward for improved production and consistent income in the current agro ecosystem,' said Raman Mittal, Joint Managing Director of Sonalika Tractors.

Even though December 2022 had the second-lowest amount of production for the year, both production and domestic sales increased from the previous year, while exports decreased.

Total tractor output increased to 59,106 units in 2021, up from 53,527 units in the previous year. Exports fell from 11,186 to 10,489 units.

According to Rohan Kanwar Gupta, Vice President & Sector Head - Corporate Ratings, ICRA, sector volumes are expected to remain strong in the March 2023 quarter, aided by favorable underlying drivers of rural cash flows.

In addition, after several delays, the new emission rules for tractors with more than 50 horsepower (Bharat Stage TREM IV) go into effect this month. To limit pollution, the revised Bharat Treaty IV rules require significant technological upgrades.

While the majority of countries have already adopted emission standards, the world's two largest markets, India and China, have lagged behind Western nations.
According to the rating agency ICRA, the Indian tractor industry's transition to updated emission standards could result in a 10-15% increase in the cost of tractors with more than 50 horsepower.

In India, on the other hand, tractors with 30-50 HP still account for more than 80% of all sales. The new rules will affect only 8-10% of industrial volumes. The remaining 92% will continue to be governed by Bharat Stage TREM IIIA norms.

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