India needs a vision for the next 15 years to convert itself into a production and export hub of non-tractor farm machinery, a report by the National Council of Applied Economic Research (NCAER) said.
Policies should address current challenges and act as accelerators to convert India’s dual farm machinery market into an advantage by producing a range of equipment that caters to all types of farmers around the world, the premier economic policy research think tank said.
NCAER has analysed the non-tractor farm machinery industry from both demand and supply side perspectives, brings out the challenges in the sector and recommends measures and reforms by benchmarking global practices in their report titled “Making India A Global Powerhouse in the Farm Machinery Industry”.
Mismatch
“The Indian farm machinery sector is dominated by tractors. The non-tractors farm machinery sector is rendered uncompetitive in terms of scale, innovation and prices. There is a mismatch between what the organised farm machinery sector produces and the needs of small and marginal Indian farmers. That mismatch needs to be addressed by a range of interventions on both the demand and supply sides for the non-tractor farm machinery to grow into a global hub,” said Bornali Bhandari, Professor, NCAER and the lead co-author of the report.
The supply-side challenges can be addressed by promoting R&D in non-tractor farm machinery, improving ease of doing business, encouraging exports and FDI, reducing reliance on imported farm machinery, improving and maintaining quality and addressing skilled worker shortages. Demand-side challenges need to be addressed by consistent subsidy policy formulation and implementation, long-term credit to small and marginal farmers and strengthening of extension programmes, the report said.
“This is an industry with myriad stakeholders. On the one hand, we have manufacturing firms, with a small number of large firms dominating the market. On the other hand, we have small and marginal farmers who consume the products. The problem is that there is a mismatch between the aspirations of small and marginal farmers who rent out equipment, if at all, and producers who want to expand the market. While India has done well in the production and export of tractors, the market for non-tractor farm machinery is fairly limited, both on the supply and demand sides. The challenge is how to expand the market,” the report said.
Mitul Panchal, Chairperson, AMMA – India said, “We welcome the findings of the report. Some of the recommendations have been a long-standing requirement of the Farm Machinery Industry. The industry today faces huge challenges in competing with cheap imported goods, skilled manpower, inefficient subsidy mechanisms and academia – industry collaboration. The recommendations in this report would go a long way in much needed policy reforms in farm machinery space.”