Why are tractors so important for farmers today?

Updated: Sep 23, 2021

Tractors have been a worthy innovation for farmers and for the agriculture sector as a whole. The tractor industry has boomed in the recent past due to the availability of credit facilities and schemes. Read on to delve into these schemes and the future penetration of tractors in the Indian market.

 

India is predominantly an agrarian economy, with approximately 60 percent of the Indian population working in the agriculture sector, contributing about 18 percent of India’s GDP. One of the major reasons for the agri sector’s growing share in the economy is the technological advancements in this field. The most notable one being the use of tractors and other farm equipment.


Tractors have been a worthy innovation replacing and reducing the human effort factor in everyday agricultural tasks like tillage, ploughing and planting in farms.

In a recently held event on 5 September 2021, Jammu and Kashmir’s Lieutenant Governor Manoj Sinha, said, “Mechanisation of farming is one of the important factors to transform the agriculture sector. It will further lead to sweeping changes and help farmers produce more.”

Representational image showing a tractor reducing human effort in the agricultural tasks like tillage and ploughing (Image credit: Unsplash)


Overall, the mechanisation provided by tractors plays a crucial role in increasing agricultural productivity. Tractors are typically designed to encounter tough farming and landscape tasks, and are thus provided with powerful engines to run over rough terrain and pull extremely heavy loads. These technical features are a step ahead from the traditional farming methods, making farming more time effective.


The rise of the tractor market in India

Going back in time, in 1961, the annual production of tractors was just 880 units per year with only a handful of manufacturers. Over the next few decades, the tractor market expanded, with nearly five lakh units produced by 1980 and close to seven lakh units by 2020. Today, about 20% of the world’s tractors are made in India.


As per estimates, 95 percent of tractor sales in India are on credit. Credit facilities are extended by Commercial banks, state land development banks and regional rural banks.

However, the larger question here is are farmers aware of the credit facilities available to them to purchase necessary equipment?


How credit facilities work

Vikas Patidar, based in Jaipur, Rajasthan, is an automobile engineer, and is presently working as a Territory Parts manager in TAFE (Tractors and Farm Equipment Limited). His organisation TAFE, is predominantly into the manufacturing of tractors and other farm equipment.


Patidar is convinced that farmers are thoroughly informed about tractors.

“Farmers are extremely aware and are completely up to date with the latest schemes and loans for buying tractors. Presently, over 90 percent of the farmers using tractors, depend on loans and schemes to purchase tractors and farm equipment,” Patidar says

Patidar further explains how the agricultural banking system works.

“So, the banking system for tractors is unlike the case of taking car loans. While car loans require a monthly EMI after purchase, farmers have to pay EMI only twice a year, after buying these tractors”, says Patidar.

A typical loan advertisement from Mahindra Finance for buying a tractor (Image credit: Mahindra Finance)


These two-time EMI payment dates are chalked out in line with the cultivation cycle for the farmer.

“Post-cultivation, the farmers sell their produce (vegetables) in the market. Keeping that in mind, these payment dates are set accordingly, based on the seasonal produce and the subsequent selling of the crops in the market”, adds Patidar.

What are some of the prominent loans and schemes available today?

Since the Indian economy is largely dependent on the agriculture sector, agricultural subsidies are prioritized by the government. Not just the central government, the state governments also initiate several schemes to assist the farmers.


In the age of technology, where machines are meant to ease life replacing the tedious traditional man-work. Understandably, a significant chunk of the farmer’s investment is towards getting these pieces of machinery.


This is where certain national and state level subsidies and schemes are aiding the cause.


Some of the prominent schemes are as follow -

  • Rashtriya Krishi Vikas Yojana (RKVY) - In this scheme, the government offers a 100% subsidy, based on the ongoing project. This assists the advancement of the farming sector by significantly working on Agriculture Mechanization. In addition, RKVY is a state plan scheme, initiated by the state governments as part of the National Agriculture Development Programme.


  • National Food Security Mission (NFSM) - This scheme aims to improve existing machinery rather than purchasing newer equipment. Maintenance of machines like tractors and tillers, are prioritized, thereby increasing the productivity on the farm.

  • Sub-Mission on Agricultural Mechanization (SMAM) -This scheme, operative in every Indian state, aims to assist the small and marginal farmers, by creating hubs that aid in the purchase of equipment. This mechanization adaptation was feasible to reduce the extreme air pollution seen during stubble burning in Haryana, Delhi, Punjab, and Uttar Pradesh.

  • NABARD Loans - This scheme offers every farmer the opportunity to purchase necessary machines, more importantly - tractors. However, NABARD expects a downpayment of 15% of the tractors or machinery cost. Nonetheless,NABARD provides 30% of the cost as a subsidy for tractors and 100% for other transport machinery.


Future penetration of tractors in the Indian market

Be it today or the future, agriculture will remain one of the most important sectors of the Indian economy. Even during the COVID-19 pandemic, this sector managed to stay insulated (In spite of the second wave of COVID-19, “agriculture & allied activities” remained the only sector that emerged unscathed from the contraction of economy, and was projected to grow at a rate of 11.7 percent during 2020-21) with timely and proactive exemptions to facilitate uninterrupted harvesting of crops. In spite of supply chain disruptions, which impacted the flow of agricultural goods, the agriculture sector aims to grow further in the near future.


To ensure this, farmers across the country aim to make the most of mechanization. Patidar, is optimistic about the growing mechanization in the agriculture sector.

Patidar says, “Farmers will definitely use more tractors in the future, as they have understood the advantages of using tractors are plentiful over the traditional farming methods. Gaaye Bhaison ka zamana gaya abhi (gone are the days when farmers used cows and bulls for farming practices).”

Patidar also credits stronger competition in the market to the increasing penetration of tractors.

“In order to keep up to the production and the competitive nature of the market, farmers these days are more inclined towards using innovative methods and newer technology for their farming practices”, adds Patidar.
 

Edited by Aparna Chandrashekhar

 

Some resources and links to help you learn more about the tractor market in India -

  1. Farm tractor market in India

  2. Tractor Industry in India Registers 42 Percent Growth in December 2020