With almost all tractor manufacturers, including majors Mahindra & Mahindra, Sonalika and Escorts, posting double-digit growth in the nine-month period ended December, the industry expects to surpass the previous sales high of 6.3 lakh units in FY2014, and clock sales of 6.5 lakh units in the current fiscal (against 5.82 lakh units reported in FY2017), said industry sources. Mahindra & Mahindra has reported a growth of 16% to 246,748 units in the April-December 2017 period, against 2,12,739 units sold in the year-ago period. Similarly, International Tractors (maker of Sonalika tractors) posted a 16% growth to 63,205 units. Escorts, too, reported a strong double-digit growth in the period under review to little over 53,000 units. As per the Tractor Manufacturers’ Association, for the period of April-November 2017, the industry recorded a growth of 16% to cross the 500,000-unit mark (501,000 units). Commenting on the company’s performance, Rajesh Jejurikar, president (farm equipment sector), Mahindra & Mahindra, said: “With the healthy reservoir levels and good progress on rabi sowing, we expect the growth momentum to continue in the coming months.”
Other factors such as government support programmes, adequate availability of finance and the revival in replacement demand in select regions have also provided an impetus to the demand for tractors, said an Icra analysis. Raman Mittal, executive director, Sonalika ITL, said, “Good monsoon this year led to a buoyant tractor industry, where Sonalika registered a growth of 15.8% during the April-December period, gaining market share. India offers huge opportunity for the tractor industry as the tractor availability at 20 per 1,000 ha is low. While India has 670,000 villages, industry-wide sales have never crossed one (tractor) sale per village in a year, hence the potential to grow is huge.”
According to Subrata Ray, senior vice-president of Icra, domestic tractor volumes are set to touch an all-time high in FY2018 with an expected growth of 13%. “Even as the overall spatial and temporal distribution of rainfall in the southwest monsoon was uneven, the farmer community sentiments have been aided by various farmer welfare programmes by the government. In addition to a continued increase in agricultural credit, there has been a gradual progress in implementation of various farmer welfare programmes, aimed at reducing the vulnerability of agri cash flows to the vagaries of monsoon,” Ray said.
Further, to prevent a re-occurrence of a significant decline in crop prices in case of a robust output, the government has imposed/hiked import duties on specific crops and announced MSP hikes that are better than previous two fiscals. State-specific schemes are also being announced to support crop realisation. All of these augur well for the tractor industry, Roy said.