AGR

RICU
ULTU
URA
AL

E INEE
ENGI
ERIN
NG
Se
ectora
al Rep
port, 2009
2

1
Natiional Institute of Agriculttural Exte
ension M
Managem
mentPage|1
(MA
ANAGE)
Hyd
derabad

Table of Contents

AGRICULTURAL EQUIPMENT INDUSTRY

5-9

1.1

Introduction

1.2

Farm Mechanization

1.3

Growth of Mechanization

1.4

Mechanization Penetration and Growth Potential

TRACTOR INDUSTRY

10-17

2.1

Introduction

10

2.2

Export Market

12

2.3

Drivers of Tractor Growth

12

2.4

Challenges for Tractor Industry

13

2.5

Profiles of Major Players

15

MICRO IRRIGATION

16-18

3.1

Introduction

16

3.2

Nature of Scheme

16

3.3

Drip Irrigation

16

3.4

Sprinkler Irrigation

18

SUBSIDY POLICY

19-20

4.1

Macro-Management of Agriculture

19

Page|2

List Of Tables

.
1.1

Availability of agriculture equipment in India

1.2

Sales of tractors and power tillers in India

3.1

Average of unit cost for installing drip irrigation system

17

3.2

Cost of sprinkler irrigation system

18

4.1

Equipments covered under subsidy

19

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List of Figures

1.1

Availability of various farm equipments/1000ha of land

2.1

Percentage of sales

10

2.2

State-wise sale of tractors (%)

11

2.3

Agricultural equipment exports (US$ million)

12

3.1

Area covered under drip irrigation up to year 2005

17

3.2

Area covered under sprinkler irrigation up to 2005

18

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1. Agricultural Equipment Industry

1.1 Introduction
Indias agricultural sector is one of the most significant components of the countrys
economy, though its share in the GDP has been decreasing over the years. Nearly 60 per cent of
Indias population is dependent on agriculture for its livelihood. Performance of the agricultural
sector continues to have a crucial impact on the prices of essential goods and market demand for
various consumer products. Agricultural Equipment industry plays a key role in supporting the
performance of the agricultural sector in India. Farming activities are increasingly getting
mechanized, 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 are the two that constitute the bulk of the industry.
The Indian agricultural equipment industry covers the gamut of equipment used for
different activities across the agriculture value chain. The manufacturing of basic agricultural
implements is largely performed by village artisans and tiny units, small scale industries and the
State Agro-Industrial Development Corporations. The traditional artisans and small scale
industries rely upon their own experience, users feedback and government owned research and
development institutions for technological support. They typically operate out of their own
homes or basic establishments that are often without regular utility services. Medium scale
industries operate in their own premises with adequate infrastructure, sometimes forming a part
of an industrial estate. They also have manufacturing and marketing facilities and employ skilled
manpower.
Products such as diesel engines, electric motors, irrigation pumps, sprayers and dusters
are produced in this sector. Complex products such as land development machinery, tractors,
power tillers, post harvest and processing machinery and dairy equipment are manufactured by
large players in the organized sector. These firms typically have large manufacturing facilities,
professional marketing network of dealers and provide effective after sales service. They also
have in-house research and development facilities or have joint ventures with advanced countries
for technology up gradation. Mahindra & Mahindras Farm Equipment Sector (FES), which
designs, develops, manufactures and markets tractors for Indian and overseas markets, is the
largest manufacturer of tractors in India. Other major players include TAFE, New Holland, John
Deere and Punjab Tractors Ltd.

Page|5

1.2 Farm Mechanization

Mechanization refers to interjection of machinery between men and materials handled by
them. In agriculture, materials are soil, water, environment, seed, fertilizer, pesticides, growth
regulators, irrigation, agricultural produce and by-products such as food grains, oilseeds, fruits
and vegetables, cotton, sugarcane, jute & kenaf and other cash crops, milk, meat, eggs and fish
etc. There is scope of mechanization in every unit operation of production agriculture, postharvest and agro-processing, and rural living.
Mechanization has varied connotations. While in the developed world it tends to be
synonymous to automation but in developing countries, like India, mechanization means any
improved tool, implement, machinery or structure that assists in enhancement of workers
output, multiplies the human effort, supplements or substitutes human labor that is enabling and
removing, avoids drudgery or stresses that adversely affect human mental faculties leading to
errors, imprecision and hazards and eventually loss of efficiency. It also means automation and
controls that assure quality, hygiene. Agricultural mechanization in a limited sense relates to
production agriculture.

1.3 Growth of Mechanization

Land
development,
Tillage,Seedbed
preparation

1. Tractors
2. Levelers
3. Ploughs
4. Dozers
5. Scrapers

Sowing&
Planting

1. Drill
2. Seeder
3. Planter
4. Dibbler
5. Transplanter

Weeding,
Intercultivation,
Plant
protection

1.Shovel/Plough
2. Harrow
3. Tiller
4. Sprayer
5. Duster

Harvesting&
Threshing

1. Harvester
2. Thresher
3. Digger
4. Reaper
5. Sheller
6. Sickle/Dao

Postharvest&
agricultural
Processing

1. Seed Extractor
2. Dehusker
3.Huller/Dehuller
4. Cleaner
5. Grader
6. Mill
7. Dryer

Over the years, the share of human and animal power in agriculture has reduced
drastically, paving the way for a variety of equipment to emerge. Many of these are driven by
tractors, diesel engines or tillers. Several of the traditional processes in agriculture have been
transformed with the advent of mechanization. For example:

Page|6

Land development, tillage and seedbed preparation, together account for a major share of
power utilization in the crop cycle. From animal driven plough and blade harrow, the
process is now being transformed by utilization of tractor driven devices.

Sowing and planting as a process, though not power intensive, has traditionally been suboptimal 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.

Irrigation of farmland has been largely automated and the use of diesel and electric
motors and pumps is now well established.

Similarly, the activities pertaining to plant protection, harvesting and threshing are being
automated, largely with the help of sprayers and tractor mounted equipment, respectively.
As a result of these developments, the use of animals to power farming activities has been
continuously declining.

The consumption of electric power for farming has also been increasing steadily another
indication of the increasing mechanization in the sector.

1.4 Mechanization Penetration and Growth Potential

Agricultural mechanization in India, while growing rapidly, is still at a nascent stage. The
penetration of almost all categories of agricultural equipment, as measured by the number of
equipments per hectare, is quite low in India. This indicates significant growth potential for the
industry in the future. Indias experience in consumer durables and automobiles over the past
decade has been that when there is a low market penetration, coupled with availability of high
quality, high technology products and ease of financing, the market booms. All these factors are
present in the agricultural equipment sector today and hence the confidence in future growth
appears sound. This factor, coupled with the growth in the tractors segment, indicates that these
could be quite attractive growth options for investors.
Table 1.1: Availability of agriculture equipment in India
Type of equipment
Manual Seed Drill/Seed Cum Fertilizer Drill
Animal Drawn Seed Cum Fertilizer Drill
Tractor Drawn Seed Cum Fertilizer Drill
Animal Drawn Leveller
Tractor Operated Leveller

Availability in Numbers Per 1000

Hectare Net Area Sown
153.2
36.1
7.2
84.8
6.2
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Manually Operated Plant Protection Equipment

Power Operated Plant Protection Equipment
Drip & Sprinkler Equipments
Horticultural Tools (Power Operated)
Tractors
Power Tillers
Tractor Operated Dise Harrow
Tractor Operated Cultivator
Tractor Operated Rotavator
Potato Digger
Straw Reaper
Forage Harvester

28.5
4.3
8.3
8.9
16.7
2.0
6.6
12.5
0.9
2.1
18.8
18.2

(Source: www.indiastat.com)

Figure 1.1: Availability of various farm equipments/1000ha of net area sown

Availability in Numbers Per 1000 Hectare Net Area Sown

16.7

12.5 0.9

6.6

2.1 18.8 18.2

8.9
4.3

153.2

8.3
28.5
6.2

84.8
7.2

36.1

Manual Seed Drill/Seed Cum Fertilizer Drill

Animal Drawn Seed Cum Fertilizer Drill

Tractor Drawn Seed Cum Fertilizer Drill

Animal Drawn Leveller

Tractor Operated Levellers

Manually Operated Plant Protection Equipment

Power Operated Plant Protection Equipment

Drip & Sprinkler Equipments

Horticultural Tools (Power Operated)

Tractors

Power Tillers

Tractor Operated Dise Harrow

Tractor Operated Cultivator

Tractor Operated Rotavator

Potato Digger

Straw Reaper

Forage Harvester
(Source: www.indiastat.com)

Page|8

Table 1.2: Sales of tractors and power tillers in India

Year
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08

Sale (number)
Tractors
247531
296080
352835
202708
190336
173098

Power Tillers
17481
22303
24791
18375
15665
14613

(Source: www.indiastat.com)

The farm equipment sector in India is nascent, but a fast growing one, that is set to
experience sustained growth due to increased mechanization of farming, easy availability of
credit and emerging practices, such as contract farming. Tractors and related equipment form the
major part of the industry and given their low penetration levels in India, look set to continue
having a significant share in the market. These appear the most attractive segments for
investment and have been attracting multinational players such as John Deere. Punjab and
Maharashtra appear attractive locations for investment given the favorable demand, supply and
regulatory scenario in these states. Andhra Pradesh and Tamil Nadu could be other options.

Page|9

2. Tractor Industry
2.1 Introduction
Tractor industry plays an important role as agriculture sector has a major contribution to
Indias GDP. Tractors are part of agricultural machinery industry. Tractors came to India through
imports and later on were indigenously manufactured with the help of foreign collaborations.
There were only 8,635 imported tractors in use in 1951. The manufacturing process started in
1961-62 with 880 numbers, but India continued to import tractors to meet the total needs up to
the late 1970s due to the slow pace of production.
Indian tractor industry is relatively young but now has become the largest market
worldwide, accounting for one third of global production. The tractor market in India is cyclic
and has been growing steadily over the years. There has been a continuous growth of about 20 %
Y-o-Y for the industry since 2003. There was a recession between 2000 and 2002 owing to poor
monsoons. The market is segmented in terms of horsepower into the 30 HP and less (lower)
segment, the 30 HP 40 HP segment, 41 HP 50 HP segment and the higher segment beyond
50 HP. The medium horse power category tractors, 31-40 HP, are the most popular in the
country and fastest growing segment, which contributes 51 % of the total market. All major
players cater to all the three segments. There has been a trend to move towards higher HP
tractors, in recent years. This has been prompted by the need for newer applications and
increasing awareness among farmers about new mechanization options.
Figure 2.1: Percentage of sales

(Source: www.ibef.org)

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Punjab, Utttar Pradessh and Haryana are the largestt markets for tractorrs, togetherr
accountting for morre than 50 % of sales (22006-07).
Figure 2.2: State-w
wise sale off tractors (%
%)

3%
3%

2%

Punjab
9%

UttarPrradesh
Haryanaa

4%

36%
%

Rajasthaan
MadhyaaPradesh

5%

Gujarat

7%

Maharashtra
7%
7%

10%
7%

Bihar
WestBe
engal
Karnataka

(Sourcce: www.ibef.oorg)

In the lastt six years,, the tractoor market has

h grown by 89%. For
F year 20
008-09, thee
domestiic market was
w about 3,,04,000 tracctors compaared with 1,,60,000 tracctors in 200
03. The yearr
(FY09) saw a prettty good firsst half at a time
t
when commodity
c
y prices werre going up;; lot of high
h
minimuum support prices and
d big credit waiver waas announceed by the ggovernmentt. However,
then cam
me the globbal meltdow
wn and its impact
i
on India.
I
Theree was a genneral econom
mic drop in
n
sentimeents despitee a third coonsecutive great
g
monsooon last yeear. The bannks clampeed down on
n
credit as
a they weree worried. The
T industry
y took a hit. It ended wiith almost a flat growth
h.
Tractor inddustry sales (including exports) arre expectedd to grow att a CAGR of
o 4-6 % inn
volumee terms to reeach a size of
o 4.3 lakh units
u
by 20113-14. Dom
mestic demannd is projeccted to grow
w
by 3-5 % by 2013--14. In value terms, thee industry iss estimated to increase from Rs 15
53 billion inn
2008-099 to aroundd Rs 215 billion by 20013-14. Opeerating marggins for tractor manufa
facturers aree
estimateed to remainn under pressure in 20008-09 and rremain flat in
i 2009-10.
In India, traactor ownerrship is veryy low. Lookking at all faarming households, thee ownershipp
is less than
t
10%. H
However, at
a the same time the uusage is as high as 35%
%. This meeans a largee
numberr of farmerss hire tractoors. There iss clearly a lot of scopee for more ownership and greaterr
penetrattion in the m
market.
(Source: www.econom
mictimes.com
m)

Page|11
1

2.2 Ex
xport Marrket
Agriculturaal equipment exports,, primarily tractor fro
om India hhave been registering
g
continu
uous growthh over the past
p five yeears. From US$ 117.4 million in FY03, tracctor exportss
rose to US$
U 451.77
7 million in FY07, a CA
AGR of 31 per cent.
Figure 2.3: Agricu
ultural equip
pment exports (US$ miillion)

200708

451.77
4

Year

200607

354.64

200506

276.91

200405

171.42

200304

117.4
47
0

50

100

150
0

200

250

300

350

400

450

500

E
Exports
(Sourrce: www.ibeff.org)

Sizeable quantities
q
arre exported
d to Africa, the Middlee East, Asiia, South America
A
and
d
n an overalll drop of 20
0% in the exports
e
of tthe industry
y during thee
other naations. There has been
year 2008-09. Exports are estiimated to grrow by 8-10
0 per cent by
y the year 22013-14.
(Source: CRISIL Rep
port April 2009)

2.3 Drrivers of T
Tractor Growth
G
Various faactors influ
uence the demand
d
off tractors. Major
M
dem
mand comess from thee
agriculttural growth
h and the seecondary deemands emaanates from the dual usse of tractorrs, primarily
y
haulagee. The majorr usage (agrriculture) iss dependent upon the fo
ollowing driivers:
Credit andd money av
vailability has always bbeen a majo
or factor inn tractor ind
dustrys and
d
mechanisaations fortu
unes. More than 90% of tractor purchases in the coun
ntry are on
n
credit. Thu
us, it becom
mes crucial that
t
a long tterm policy
y of zero or marginal in
nterest ratess
to enhancee the use of agriculturall mechanisaation must be
b initiated by
b the goveernment.
Emergencee of contracct farming.

Page|12
2

Contract farming enables the farmer to get the benefit of technology, training and
financing with the contractors support. This facilitates adoption of mechanised
farming practices.

Migration of agricultural labour to urban areas

Decrease in number of manual workers in farming has necessitated the move
towards increased mechanisation. As a result, the domestic market for tractors
has been growing steadily for the past few years.
Expansion and extension of area under agriculture:
From the past 20 years it is evident that irrigated and arable land has not
increased considerably. There is a need to increase agri-land by converting the
wasteland.
In the last few years there have been very few additions with respect to directirrigation potential. There has been exploitation and depletion of groundwater.
Thus, availability of water is an important factor in having a good agricultural
yield, without having to depend on seasonality of monsoons.
The governments short term focus must be on increasing and maintaining
natural water sources such as natural water storages, ponds, lakes and retention
dams.
Farming Value additions:
Our aim should be to get the maximum yield from least inputs.
Government must encourage farming community to move from low yield to high
yield crops in a judicious manner. This will help in increasing the farming
income and attract young blood in farming.

2.4 Challenges for Tractor Industry

The tractor industry in India faces numerous challenges that are unique in their own
respect. Following are some of the challenges faced:
Buying Capacity Reducing of average age of tractor buyers from the age group of
above 40 to younger people. Implications are:
Increasing demands
Higher expectations on comfort levels
Importance for styling and appearance
Better finish (paint finish like cars)
Importance fro brand identies
Fuel economy
Awareness about latest technologies
Page|13

Longer life resale value

New product development

Rapid prototyping component development
Engine development power train research and development
Styling availability of latest softwares and technologies
Accelerated testing techniques reduce the development lead time to help industry
to introduce new models in shorter periods.
New emission norms in near future Bharat TREM IV/ EURO 3/ US TIER 3
Homologation test facilities
Dedicated engine development test cells and research labs
Accelerated durability test rigs
Engine performance improvement
New regulations Noise/ safety/ other regulations
NVH Centre of Excellence
Availability of anechoic chambers
Quiet rooms for subsystem level development
Specialised test tracks
Centre of Excellence for passive safety
Roll over testing
Crash testing
Various gradients
Various braking surfaces
Vehicle dynamics
Alternate Energy Alternate energy source development and tractor development are
interdependent:
Increased focus on agri based energy policy in future
Production of fuel oil and biomass power
Lucrative alternate markets for farm produce
Reduction of countrys dependence on imported fuels
Alternate energy development
Application of electronics - Recent developments in use of electronics like GPS and
Auto Cruise System on tractors have helped farmers greatly.
Export potential
Page|14

Testing under various climatic conditions

Testing and certification as per OECD
Cooperation with other test agencies worldwide
Advanced homologation labs to test as per regulations by 2015

2.5 Major Players

There are currently 14 players in the industry. This includes some foreign companies too.
Below is the list of tractor manufacturing companies:
1. Mahindra & Mahindra Ltd.
2. TAFE Ltd.
3. Escorts Ltd.
4. HMT
5. Punjab Tractors Ltd.
6. Sonalika
7. John Deere
8. New Holland
9. Same-Deutz-Fahr
10. Indo Farm

Page|15

Micro Irrigation

3.1 Introduction
Although water is a renewable resource, its availability in appropriate quality and
quantity is under severe stress due to increasing demand from various sectors. Agriculture is the
largest user of water, which consumes more than 80% of the countrys exploitable water
resources. The overall development of the agriculture sector and the intended growth rate in
GDP is largely dependent on the judicious use of the available water resources. While the
irrigation projects (major and medium) have contributed to the development of water resources,
the conventional methods of water conveyance and irrigation, being highly inefficient, has led
not only to wastage of water but also to several ecological problems like water logging,
salinization and soil degradation making productive agricultural lands unproductive. It has been
recognized that use of modern irrigation methods like drip and sprinkler irrigation is the only
alternative for efficient use of surface as well as ground water resources. Hence, this scheme on
Micro Irrigation (MI), which aims at increasing the area under efficient methods of irrigation viz.
drip and sprinkler irrigation.

3.2 Nature of Scheme Micro Irrigation Scheme

This is a Centrally Sponsored Scheme under which out of the total cost of the MI
System, 40% will be borne by the Central Government, 10% by the State Government and the
remaining 50% will be borne by the beneficiary, either through his/her own resources or soft
loan from financial institutions. In other words, out of the Governmental assistance, 80% share
(40% of unit cost) will be met by the Government of India (GOI) and the balance 20% (10% of
unit cost) will be met by the participating State Government. The concerned States shall make
available their share of 20% to the Implementing Agencies (IA) during the financial year.

3.3 Drip Irrigation

Drip Irrigation involves technology for irrigating plants at the root zone through emitters
fitted on a network of pipes (mains, sub-mains and laterals). The emitting devices could be
drippers, micro sprinklers, mini sprinklers, microjets, misters, fan jets, micro sprayers, foggers
and emitting pipes, which are designed to discharge water at prescribed rates. The use of
different emitters will depend upon specific requirements, which may vary from crop to crop.
Water requirement, age of plant spacing, soil type, water quality and availability are some of the
factors which would decide the choice of the emitting system. Sometimes microtubes are also
used as an emitter, though it is inefficient. All types of surface and subsurface irrigation systems
are covered under MI Technology.
Page|16

Table 3.1:
3 Averag
ge unit cost for
f installin
ng drip irrigaation system
m
State Category
C

Averaage Cost (R
Rs./ha)

40, 000

46,000

50,000

States wh
here more th
han 10,000 hectares haave been brrought undeer drip irrig
gation as on
n
1.4.2004 w
would comee under A Category.

S
except those co
overed und
der Categorry A andd those fallling in thee
All the States
Himalayann belt would come und
der Category
y B.

N
Easttern States, Sikkim, Himachal Pradesh, Jammu & Kashmir,
All the North
Uttarakhannd and Darjeeeling distriict of West Bengal wou
uld come unnder Catego
ory C.

Figurre 3.1: Areaa covered un

nder drip irrrigation up tto year 2005
5

Area(ha)

219696
2

10025

6483

09
460

4262

MadhyaPradesh

Uttar Pradesh
UttarPradesh

Punjab

4219
Haryana

10559
9

Rajasthan

Gujarat

AndhraPradesh

Karnataka

Tamil Nadu
TamilNadu

Maharashtra

16
6686

Kerala

1166
665 114304 111407

Statess
(Source: www.indiasttat.com)

Page|17
7

3.4 Sp
prinkler Irrrigation
Underr sprinkler irrigation
i
w
water
is sprrinkled undeer pressure into the aiir and plantt
um or High Density Po
oly Ethylenee
foliage through a sset of nozzlees attached to network of aluminiu
t form off rainfall. Th
hese system
ms are suitab
able for irriggating crops where thee
(HDPE) pipes in the
here adoptio
on of Drip Irrigation Systems may not be economical
e
.
plant deensity is veery high wh
Sprinkler irrigatio
on is suitaable for horticultural
h
l crops lik
ke vegetables and seeed spices.
ntionally, spprinkler irriigation has been wideely in use for
f irrigatin
ng Cereals, Pulses, Oill
Conven
Seeds and
a other fieeld crops.
Table 3.2:
3 Cost off sprinkler irrrigation system
C
Coupler
diaameter (mm
m)

Coost (Rs.)

63 mm

13690

75 mm

14270

90 mm

17280

der sprinklerr irrigation up

u to 2005
Figure 3.2: Area ccovered und

5038
862

Area(ha)

460529

15002
20
36333
Gujarat

20220
Orissa

263
332
Tamil Nadu
TamilNadu

100000

MadhyaPradesh

84490

AndhraPradesh

Maharashtra

Karnataka

Rajasthan

Haryana

17320
11

WestBengal

157028

States

(Source: www.indiasttat.com)

Page|18
8

4. Subsidy Policy
4.1 Macro-Management of Agriculture
The States have been given flexibility to develop & pursue activities on the basis of their
regional priorities. The States are free to include new interventions in their Work Plans provided
these are not covered under any other scheme of the Central Government or are not a part of any
ongoing State Scheme. The expenditure on any new initiative should not be more than 10% of
the total allocation to the State (for the year) under Macro-Management Scheme. As per
approved pattern, there would be a cap on subsidy to the farmers incorporated in the Work Plans.
Subsidy per farmer or per activity should not exceed 25% of the cost or the present subsidy level
approved under 27 identified schemes, whichever is lower. Besides, the subsidy is also available
on identified agricultural implements under the schemes of oil seeds production programme
National Pulses Development Project, Technology Mission on Cotton, Technology Mission on
Horticulture for North Eastern Region.
The following agricultural equipments are available on subsidy under Central Sector Plan
Schemes. The subsidy is available to the farmers @ 25% of the cost of equipment subject to
certain ceiling limits.
Table 4.1: Equipments covered under subsidy
S. No.

Name of Implements/Machines

1.

Tractor

2.

Power Tiller

3.

Power Drawn implements

4.

Power Threshers (all types)

5.

Sprinklers

6.

Drip Irrigation

7.

Animal drawn implements

8.

Manually operated implements/ tools including Horticultural Tools

9.

Plant Protection Equipment

i) Manual
ii) Power operated
iii) Tractor mounted

Page|19

10.

Self Propelled reaper, paddy transplanter and other similar self propelled
machines

11.

Specialised power driven equipment such as Sugarcane cutter planter,

potato planter, rotavator, straw reaper, strip till drill, tractor drawn reaper
etc.

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