Modi's pro farmer policies likely to help India's tractor industry reach record sales
By Ketan Thakkar: ET Bureau | Updated: Apr 06, 2017, 02.06 AM IST
MUMBAI: Pro-farmer policies of the Narendra Modi government, and an economy on course to cement its credentials as the world’s fastest-expanding will likely help India’s tractor industry reach record sales in the financial year that began this week, alleviating concerns of demand shrinkage caused by insufficient monsoon rains. If the industry sustains double-digit growth in FY18, it may eclipse the record set four years ago. In FY17, tractor makers sold 582,000 units, registering a growth of 18 per cent. Even if the industry expands 10 per cent in FY18, sales would touch 640,000 units, higher than the 631,000 units sold in FY14.
“The overall effort from the government and the emphasis on the farming sector are very visible, which is an enabling factor for growth,” Rajesh Jejurikar, president for the farm equipment sector at Mahindra & Mahindra, told ET in Mumbai on the sidelines of the event launching the Jivo small tractor.
Water levels in reservoirs, the ease of financing and interest rates, and Minimum Support Prices given to farmers are all favourable for the tractor segment, said Jejurikar, whose company is the biggest tractor maker in the country.
While weather tracking agencies, especially Skymet Weather Services, have advised caution, Jejurikar seemed confident that the growth momentum will sustain. “The forecast of 5% below normal monsoon this year is not a matter of a panic. And beyond monsoon .. Over the past few years, Mahindra Tractors have been outpacing the market, led by a series of new platforms. The company had a market share gain of 1.8 per cent in the last fiscal alone and it currently has its highest ever market share of 42.7 per cent.
Jivo is the third new platform launched by Mahindra in the past three years. After launching the Nuvo in FY16 and Yuvo in FY17, Mahindra on Wednesday launched the Jivo, which is based on a platform developed with an investment of Rs.90 crore and catering to the sub-30 horsepower market. The segment accounts for 8-10% of the overall tractor market and the space has been growing at a compounded annual growth rate of 7 per cent over the last few years.
Already a leader in sub-30 horsepower space with Yuvraj tractors that have half the share of the total market, Mahindra is aiming to cater to the fast growing horticulture space and row farming or the high end market with the Jivo within the sub-30 hp range.
Priced at Rs.3.9 lakh to Rs. 4.05 lakh, Jivo is a four wheel drive tractor that the company has priced almost Rs.1-1.1 lakh lower than its nearest competitor.