Annual tractor production crossed 1 million units for the second consecutive year in 2022, but reported a 6 per cent drop, compared with 2021. Domestic sales reported a marginal increase amid a high base effect. Exports maintained growth at 6 per cent and clocked its highest-ever number in 2022.
Aided by healthy cash flows in the farm sector on the back of the above-normal monsoon, tractor demand stayed relatively healthy in the domestic market during 2022 while exports continued to grow. This comes after a record sales year in 2021.
The total domestic tractor production for 2022 stood at 1,004,976 units, compared with 1,065,280 units, the highest-ever annual number, in 2021.
Total domestic sales marginally increased to 912,061 units in 2022, compared with 903,724 units in 2021, while exports registered a 6 per cent increase at 131,850 units, the highest-ever annual export number, as against 124,901 units in 2021, according to data provided by the Tractor & Mechanisation Association (TMA).
Hemant Sikka, President, Farm Equipment Sector, Mahindra & Mahindra Ltd, said the sentiments continue to remain upbeat in the farming sector, leading to strong demand for tractors and farm implements.
Mahindra & Mahindra, India’s top tractor maker with little over 40 per cent market share, reported a 4 per cent increase at 371, 848 units in 2022 when compared with 359,417 units.
“Farmers have been now steadily accepting that farm mechanisation is the way forward towards higher productivity and consistent income in existing agri ecosystem,” said Raman Mittal, Joint Managing Director, Sonalika Tractors.
Though December 2022 recorded the second-lowest production number for the calendar year, both production and domestic sales grew year-on-year, while exports reported a decline.
Total domestic sales in December 2022 stood at 55,782 units when compared with 44,428 units in December 2021. Total tractor production was higher at 59,106 units when compared with 53,527 units in 2021. Exports were lower at 10,489 units against 11,186 units.
However, industry volumes are expected to remain at healthy levels in March 2023 quarter too aided by favourable underlying drivers for rural cash flows, said Rohan Kanwar Gupta, Vice President & Sector Head - Corporate Ratings, ICRA.
Meanwhile, the revised emission standards for above 50 HP tractors (Bharat Stage TREM IV) come into force this month after multiple postponements. The new norms under Bharat Tream IV call for significant technological changes to reduce pollution.
While most countries have already transitioned to emission standards, the world’s two largest markets – India & China – have, however, lagged behind the developed countries.
Indian tractor industry’s transition to revised emission norms could result in a 10-15 per cent increase in the cost of tractors in the above 50 HP category, according to rating agency Icra.
However, India remains a medium-to-high HP tractor market with 30-50 HP categories making up about 80 per cent of the volumes. The new norms are expected to affect only 7-8 per cent of the industry volumes and the new remaining 92 per cent will continue to be governed by Bharat Stage TREM IIIA norms.