Farm Machinery Uses and Agricultural Machinery Industries in India: Status, Evolutions, Implications

1. Farm Machinery Uses and Agricultural
Machinery Industries in India: Status,
Evolutions, Implications
Acknowledgements: Hiro Takeshima, Ravindra S Shekhawat, and others.
Presented at South-South Knowledge Sharing on Agricultural Mechanization
Gajendra Singh &
Madhusudan Bhattarai

2. 1. Evaluation of current status of farm machinery uses in India,
and its spatial and temporal variation and their significances
2. Illustration of development phases of farm machinery uses
(and evolution of four wheel tractor) in India.
3. Assessment of demand side and supply side factors of farm
machinery uses in India, and historical and spatial patterns.
4. Assessment of policy implications & lessons learning out of
the India case to other countries in Asia and Sub-Saharan
Africa
Outline of Presentation

3. India: Salient Feature
• Per Capita Income: US$ 1800 (PPP: US$ 4200)
• 3rd Largest Economy on PPP basis ($ 5.5 trillion) .
• Nominal GDP: $ 2.3 trillion;
• Savings rate: 30%.
• Agriculture contributes: 14% of GDP (50% employment).
• World important farm machinery market, fastest growth
• World largest tractor market with over 600 K sale/year,
with market size of > 5 billion USD (tractor alone)
=> India case provides several lessons for developing
countries in Asia and Africa.

4. Challenge
• Main challenge is to increase production and
productivity of smallholding agriculture to feed
the growing population.
• With sufficient food stocks, the big challenge is
also to curve wastage, provide adequate Food
and Nutrition Security to all population, and
ensure judicious distribution of food.
• Urgent need is to improve the income of >100
million farm families (>250 million workers)
cultivating 140 million ha land; >50% work force
contributing only 14% to GDP.

5. 1961 880 Domestic Production of Tractors started
1970 20,000 Net importer up to 1976
1980 71,000 Exports started: Africa
1990 140,000 Exports grew up to 7,000/year
2000 256,000 Exports grew upto 50,000/year
2010 548,000 Exports to USA, Malaysia,Turkey, South
2011 640,000 Asian and African countries
2012 579,000 Exports about 63,300 tractors
2013 699,000 Exports about 62,700 tractors
2014 613,000 Exports about 77,500 tractors
2015 572,000 Exports about 75,400 tractors
2016 >600,000 Exports about 80,000 tractors
=> India produces > 1/3rd of global 4-wheel tractors.
India is now the biggest producer of tractors in the
world; with M&M as the no 1 company globally
Source: Tractor Manufacturers Association (TMA, India)
Spectacular achievement in annual tractors sales (4-wheel)

6. 0
20
40
60
80
100
120
140
160
No of Tractor/1000 ha of Net Cropped Area
0264
NumberofTractor(inMillion)
1960 1970 1980 1990 2000 2010
Year
Tractors use over
the years is
growing at an
exponential pace
at all India level
Tractor intensity
widely varies
across the
states (regions)
A huge spatial variation exists on tractors use is in India!
Also, suggests
for a huge
opportunity for
tractor growth
in future

7. Animal power has been replaced by tractor power in India
Share of agricultural worker & draught animals came down from
60.8% in 1971-72 to 10.1% in 2012-13; Source: CIAE, Bhopal

8. Development pathways of farm machinery sector in India
N Development pathways Major characteristics/ Changes
1 Pre- Independences • In 1914, first tractors imported to reclaim land
In 1934, manufacturing of pumps started
2 Initial period
(1947- 1966)
• 1961 => Manufacturing of tractor & Import of Power T begun
• 1962 => Manufacturing of Power Tiller started
3 Green Revolution Era
(1967 to 1991)
• In 1967 => Govt. imposed statutory control on selling price on
domestically manufactured tractors
• In 1967, The Agro-Industry Corporations were set up in states
• Number of tubewells and threshers grew rapidly
• 1968, Harvesters were introduced in Punjab (India) to address
peak season labor scarcity; custom hiring becoming popular
• 1974- Statutory price control withdrawn (tractor)
• 1973- Import of fully build tractor was banned
4 First wave of reform in
national economy
(1991/92- 2004/05)
• 1992 , no license needed to set up tractor industry, and import
and export of Farm Machines were liberalized
• Several MNC (New Holland, John Deere, ..) came in India to set
up production of tractor and other farm machinery
5 Second wave of reform
in national economy
(2005/06- 2015/16)
• Govt. started support to CHSC-AM at several places
• SMAM came in 2014, with bigger push in AM
• Tractor company & others started to set up CHSC-AM in
several places in PPP mode. IT used in CHSC-AM.

9. Power tiller use has not picked up in India
There are many reasons for limited expansion of power tiller in India

10. Custom Hiring Services of
Agricultural Machinery

11. Different Models of Custom Hiring Services of AM
1. Individual farmer led …(a)……(b)….
2. Farmers group purchased machineries
3. Cooperative managed CHSC-AM & services
4. Implement Traders’ led CHSC-AM
5. Individual entrepreneur (LSP) operated
6. NGO (non-profit group) supported AMS
7. Govt. supported center (PPP mode)
8. CHSC- AM set up under PPP mode
9. Big Business operated center (TRRINGO, EM3, Zamindara).
10. Start-up firm, with app based coordinated–CHSC-AM

12. An Interesting Innovation is taking place on Harvesters use in India
1. Large farmers, privately owned harvester with
limited renting out to fellow farmers nearby.
2. Traders, entrepreneurs, drivers, doing rental
business of harvesters (dominant one);
1 machine cover= ~ 600 ha/year, and it covers a
distance of over 1,000 km/year)
3 Farmers Groups, Farmers Cooperatives,
Multipurpose Societies.
4 Custom Hiring Center (govt., cooperatives, etc.)
5. Corporate firm - (Tata chemicals, EM3 Agri
services, etc.)
First Harvester
brought in India
(1968)
Over 50,000 harvesters are
operating in India at present

13. Annual market of major farm machinery used in India
Item Numbers Item Numbers
Tractors 450000 - 500000 Power tillers 50000 - 60000
Plow: MB/Disc 45000 - 50000 Rotavator
(Rotary tiller)
100000 - 120000
Cultivators 150000 - 200000 Harrows 120000 - 150000
Seed-ferti drills 60000 - 75000 Planters 15000 - 25000
Rice transplanters 2000 - 3000 Power weeders 35000 - 40000
Reapers 10000 - 15000 Threshers 60000 - 75000
Combine harvesters 3500 - 4000 Trailers 150000 - 175000
Sprayers (TD) 10000 - 15000 Laser land levellers 2500 - 3500
Potato diggers 25000 - 30000 Rotary hoes 20000 - 25000

14. • BIS standards; Testing facilities (4 GOI+29 at Ag. Eng.
institutions); Training and Extension
• Rate of subsidy: about 25% with limit on amount;
• Sub-Mission on Agricultural Mechanization (SMAM):
Subsidy to Small, Marginal, SC/ST and Tribal farmers on
farm equipment up to 40%;
• Financial Support / Subsidy to Entrepreneurs to establish
custom-hire centers and Hi-Tech. machine centers.
• Unlike the case in many other countries, Govt. Subsidy
for FM in India is not tied to any particular brand, or HP
size of tractor or machinery, which has helped to healthy
growth of tractor and other farm machinery industries
Policies that are Supporting Mechanization

15. Priorities for Future Mechanization
• Expand uses of agricultural residues; Biogas, solar and
wind energy, as sources of power of farms.
• Farm production techniques with low energy
requirement: Minimum tillage, Zero till planting,
Conservation agriculture.
• Farm machinery for higher water use efficiency: Laser
land leveling, Micro irrigation.
• Farm machinery for higher fertilizer use efficiency: Seed-
cum-fertilizer drills, Fertigation.

16. Priorities for Future Mechanization
• Public support and incentives to alternate models of
Custom-hire services targeting machinery needs of
smallholding farmers and marginal farmers
• Advance FM : Nursery for rice seedlings, vegetables
seedlings and transplanting; Protected cultivation.
• Specialized machinery promotion: Sugarcane harvesting,
Cotton picking, harvesting of small grain crops,
harvesting and post harvest of horticultural crops.
• Mechanization of animal husbandry and fisheries
operations.
• Mechanization for hill agriculture and small plots.

17. Policy Reforms needed
• Business and enterprise friendly policies, laws, and
regulations.
• Reduction of direct subsidies for Farm machinery but to
invest more on infrastructure, mainly, roads, electricity
supply, irrigation systems and markets with storage and
processing facilities in catchment areas.
• Lower interest rates on loans and lower taxes for purchase
of equipment and machinery for agricultural operations and
food processing. (i.e., more of back end subsidy).
• Promote entrepreneurship at local level to provide custom
hire services of FM (in Taxi model).
• Provide financial and technical support to individual rural
enterprises (entrepreneurs) to start rental market services
of CHSC-AM, this could be in PPP or other small scale
operation of CHSC-AM.

18. 1. Through custom hiring services, even smallholding
farmers are able to use costly machine (tractor, Laser
land leveler and harvester) and getting benefits of FM.
2. Application of smartphone and mobile apps in rental
services have reduced cost of transaction of services
provisions (cost of doing business) with smallholdings.
3. Due to heterogeneity of farmers (and farming
practices), there is no-one-size-fits-for-all type of a
model of farm machinery uses (or to CHSC-AM models)
for whole India. Various models operate at a place.
4. The Farm Machinery use related policies need to be
adapted and tested for wider scale uses.
Take Home Messages

19. Sustainable
Agricultural
Mechanization
Sustainable
production
intensification
Optimum use
of farm inputs
Environmental
friendly
agricultural
management

20. Thank You
prof.gsingh@gmail.com
Madhu.Bhattarai2010@gmail.com