Tractor Industry in India Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

Tractor Industry in India Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

The India Agricultural Tractor Market size is estimated at USD 7.42 billion in 2024, and is expected to reach USD 10.28 billion by 2029, growing at a CAGR of 6.70% during the forecast period (2024-2029).

Key Highlights

• The demand for agricultural machinery, including tractors, increased due to higher Kharif sowing, good cash flows to farmers, a timely and normal monsoon in the country across June and July, continued higher rural spending by the government, and exemption from lockdown restrictions.
• Government initiatives toward rural development, farm mechanization, and various factors, such as high rural wages and scarcity of farm labor, are likely to increase the tractor volume over the long term.
• Two-wheel-drive tractors are more popular than four-wheel-drive tractors in the Indian market. The agriculture tractor market is dominated by aboriginal Indian OEMs, namely Mahindra & Mahindra Limited, TAFE, International Tractors Ltd (Sonalika), and Escorts Limited. Key international tractor manufacturers like Deere & Company and CNH penetrated the market and established a decent market presence.
• India remains a highly lucrative tractor market because of the decreasing availability of farm labor and the rise of innovative business models, such as custom hiring solutions for tractors. In India, under the mechanization component of the macro-management scheme of agriculture by the Indian government, there is a subsidy for promoting agricultural mechanization, including 25% of the cost limited to INR 30,000 for buying tractors of up to 35 PTO HP. Thus, with the rising government support for enhancing farm mechanizations and expansion in crop production, the sale of agricultural tractors is anticipated to rise in the upcoming years.

India Agricultural Tractor Machinery Market Trends

30-50 HP Tractors Are Widely Preferred

• 30 HP- 50 HP are moderate horsepower tractors that work well in soft soil conditions, such as river basins. In India, the demand for 30 HP- 50 HP tractors is high owing to low disposable income of farmers and high labor costs. Due to small farmland sizes, farmers prefer small and customized tractors for agricultural purposes. Moreover, less fuel consumption by small tractors helps to empower small and marginal farmers.
• Furthermore, with the average size of household ownership decreasing, farm holdings are seeing a downward trend. 30-50 HP tractors are viable and efficient for small farm holdings and are vital to increasing productivity. Therefore, 30 to 50-horsepower tractors are most commonly used in India.
• The players in the market are also focusing on launching new models to increase their market share. For instance, in November 2022, VST Tillers Tractors Ltd and Zetor Tractors launched two new tractor models with 40 and 50 HP engine capacities, respectively.

Uttar Pradesh Provides the Biggest Market for Tractors

• ​Agriculture is the most crucial aspect of the Uttar Pradesh economy, contributing 28% to the economy in 2022, according to the Ministry of Statistics and Program Implementation (PRS). It is the primary source of livelihood for a significant portion of the state’s population. The vast agricultural activities in the states drive the market for agricultural machinery, including tractors. Tractors are mainly used to carry out various farming tasks such as plowing, tilling, sowing, harrowing, and harvesting, thereby increasing the efficiency and productivity of agriculture in the state.
• In Uttar Pradesh, the fragmentation of land holdings has led to smaller land parcels, making traditional manual labor-intensive farming less feasible. Tractors offer a more efficient alternative for small-scale farmers to manage their land. This has led to the increased adoption of tractors in farming practices, making Uttar Pradesh the first state with more tractor sales in India.

India Agricultural Tractor Machinery Industry Overview

The agricultural tractor market in India is consolidated and dominated by large global and domestic manufacturers, and farmers prefer trusted brands for quality assurance and better after-sales services. Mahindra & Mahindra Ltd, Tractor and Farm Equipment Ltd (TAFE), International Tractor Ltd, Escorts Limited, and John Deere India Private Limited are some leading players occupying the highest share in the market.​ These major players are investing in new products and improvisation of products, expansions, and acquisitions for business expansions. Another significant investment area is the focus on R&D to launch new products at lower prices.

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