Affordable, mini-tractors priced at around Rs 2 lakh are the next big thing for tractor makers looking to increase sales in a slow market. Gujarat's low-cost vendor base advantage has made it a manufacturing destination of choice for such models.
Such tractors do a job similar to more powerful variants, though with lesser efficiency. Mini-tractors are looking to open a new market for operations such as inter-weeding and growing row-crops such as groundnut, cotton and sunflower. At present, these processes are largely non-mechanised.
“It is about seeking new opportunities. All players are eyeing this market for the affordability factor and are seeking partners for a low-cost base,” an industry source said.
At present, the average 45 HP tractor (most popular) is priced at around Rs 4.5 lakh. In India, the major tractor market is the 30-70 HP range (Rs 3.5–5.5 lakh).
New launch
Escorts launched its sub-20 HP range on Monday in a manufacturing and distribution tie-up with Gujarat-based Amul Industries - for the Gujarat, Maharashtra and Andhra Pradesh markets, while Delhi-based Sonalika is expected to enter the segment soon.
Market leader Mahindra & Mahindra (Yuvraj range) also makes similar models from its Rajkot, Gujarat plant. Chennai-based firm Tractors & Farm Equipment Ltd and smaller player Captain also operate in the segment.
Most of these models have been launched just over the last one year. With Friday's Budget increasing excise duties by two per cent, tractor prices are expected to go up by Rs 15,000 from April.
Higher raw material costs have already led to a 10 per cent (Rs 40,000-50,000) price hike over the last two-three years.
This is while sales are already slowing down in the last few months because of reduced farm incomes and higher expenses on labour and interest rates. In 2011-12, sales are estimated to end at 6.05 lakh units, according to rating agency ICRA.
That is just an 11 per cent growth, compared to an over 20 per cent rise seen in both 2010-11 and 2009-10.
In fact, tractors sales have more than doubled in the six fiscals since 2004-05 (2.26 lakh units).