The India Agricultural Tractor Market is projected to witness a CAGR of 8.9% over the forecast period, 2022- 2027.
The tractor industry in India remained largely unaffected due to the impact of COVID-19, and tractor sales in India decreased only in April 2020 due to lockdown restrictions. Throughout the remaining part of 2020 and moving into 2021, the demand for agricultural machinery, including tractors, increased due to higher Kharif sowing, good cash flows to farmers, a timely and normal monsoon in the country across June and July, continued higher rural spending by the government, and exemption from lockdown restrictions.
Government initiatives toward rural development, farm mechanization, and various factors, such as high rural wages and scarcity of farm labor, are likely to increase the tractor volume over the long term. In terms of units, India is one of the largest tractor markets globally, selling 600,000 to 700,000 tractors per annum on average between 2016-2021.
Two-wheel drive tractors are found to be more popular than four-wheel-drive tractors in the Indian market. The agriculture tractor market is dominated by aboriginal Indian OEMs, namely Mahindra & Mahindra Limited, TAFE, International Tractors Ltd (Sonalika), and Escorts Limited. Key international tractor manufacturers, such as Deere & Company, CNH penetrated the market and established a decent market presence.
India remains a highly lucrative tractor market because of the decreasing availability of farm labor and the rise of innovative business models, such as custom hiring solutions for tractors. In India, under the mechanization component of the macro-management scheme of agriculture by the Indian government, there is a provision of subsidy for promoting agricultural mechanization, including 25% of the cost limited to INR 30,000 for buying tractors of up to 35 PTO HP. Thus, with the rising government support for enhancing farm mechanizations and expansion in crop production, the sale of agriculture tractors is anticipated to rise in the upcoming years.