Rural infrastructure is essential for improving the quality of human life in India’s rural hinterlands and for accelerating the process of agricultural development. According to the Wharton School of the University of Pennsylvania, agricultural infrastructure can be categorised into three broad categories. The first category is capital intensive agricultural infrastructure which includes irrigation, roads and bridges. The second category is capital extensive agricultural infrastructure and that includes extension services. The third category is institutional infrastructure which includes formal and informal institutions. Adequate infrastructure raises farm productivity and lowers farming costs. Its fast expansion accelerates agricultural as well as the economic growth rate. Input based infrastructures are seeds, fertilisers, pesticides, farm equipment, and machinery. Resource based infrastructure includes water/irrigation, farm power/energy. Physical infrastructure includes road connectivity, transport, storage, processing, and preservation.
Market size of agriculture equipment
The Indian agricultural machinery market is projected to grow at a CAGR of around 6.6% to reach Rs. 769.2 billion by FY 2022. It plays a key role in supporting the performance of the agricultural sector in India. Farming activities are increasingly getting mechanised and the availability, quality, and performance of agricultural equipment has an increasing impact on improving the output and productivity of the agricultural sector. While India manufactures and deploys a range of agricultural equipment across the industry value chain, tractors and tillers constitute the bulk of the industry. Manufacturing of agricultural equipment has the presence of around 250 medium and large scale enterprises, 2,500 small scale and 18,000 tiny units in India.
The top five vendors in the market are Deere and Company, Mahindra & Mahindra, Sonalika, TAFE and VST. Other prominent vendors include AGCO, Beri Udyog, LAAS, CNH, Daedong, Escorts Group, Foton Lovol, Kubota, KUHN, LEMKEN, McCormick, Pöttinger, and SAME DEUTZ-FAHR.
Most of the Indian farm equipment is tractor driven and 41-50 HP is the largest selling segment. The country is one among the leading tractor markets and is expected to reach revenue of $6500 million by 2019. India is the largest manufacturer of tractors and sales have been growing due to the increasing rate of mechanisation. Mahindra & Mahindra accounts for nearly 45% of the market share in India and is closely followed by TAFE. Availability of power, good monsoons and minimum support price for farmers are some of the main factors that impact the sale of farm equipment.
Changes due to mechanisation
The main equipment that are used for farming in India are sickle, brush cutter, winnowing fan, combine harvester, maize harvester, wheat harvester, sugar cane harvester, paddy harvester, thresher, maize thresher, groundnut thresher, wheat thresher and paddy thresher.
From animal driven plough and blade harrow, the process is now being transformed by utilisation of tractor driven devices. Sowing and planting as a process has traditionally been sub-optimal due to the complexity of drilling of land and then uniformly sowing the seeds. This process is now being transformed by modern seed, drills and planters. The use of diesel and electric motors and pumps is now well established. The activities pertaining to plant protection, harvesting and threshing are being automated, largely with the help of sprayers and tractor mounted equipment. The consumption of electric power for farming has also been increasing steadily.
Easy availability of financing has been a key driver of consumption across different sectors in India and agriculture is no exception. More than 90% of tractor purchases in India are on credit.
Contract farming and migration
There have been several examples of successful contract farming ventures in India and companies like Pepsi Foods, Rallis and Appachi Cotton have been involved in successful ventures. Contract farming enables the farmer to get the benefit of technology, training and financing with the contractor’s support. This facilitates adoption of mechanised farming practices.
There has been an increasing trend of rural outward migration. The decrease in number of manual workers has necessitated the move towards increased mechanisation. As a result of these trends, the domestic market for agricultural equipment in India has been growing steadily.
The government has proposed a number of initiatives focusing more on farm mechanisations that is expected to boost the growth of the agricultural machinery in India. The primary concerns of the initiatives are creation of hubs for hi-tech farm equipment, financial assistance for farmers for hiring and procurement of the machinery in low-mechanised regions and testing of various machineries at top institutes like Indian Council of Agricultural Research (ICAR), Farm Machinery Training and Testing Institutes (FMTTI), and State Agricultural Universities (SAU).