Agricultural Machinery Market in India 2023-2028

The application of agricultural equipment over manual labor for farming activities is known as farm mechanization. Traditional farming methods include ploughs, tillage, and seeders, which are being replaced with multiple modern types of machinery such as spraying equipment, hay, and forage equipment, harvesters, and irrigation and crop processing equipment. In India, the use of power tillers is prominent in sugarcane farming, rice cultivation, wheat farming, and paddy cultivation. It is also extremely useful in terrace farming in hilly regions of Uttarakhand, Himachal, and part of north-east India.

The market is characterized by high demand for food owing to increasing population and fragmented lands that push the need for enhanced agriculture production across the globe.

Higher demand for farm tractors and harvesting machinery is expected to promote market growth. The use of deep learning, the Internet of Things (IoT), and automated robotics solutions in agricultural machinery is gaining traction among global companies. The Indian market for agricultural machinery is fragmented with large-scale manufacturers focused on developing advanced machinery, followed by small-scale and village manufacturers who are focused on cost-effective simple machinery and tools used in agriculture.

The agricultural machinery market in India is also witnessing swift integration of technology with help from start-ups. These are based mainly on the farming-as-a-service (FAAS) model. Moreover, several industry players are focusing on amalgamating sophisticated technologies such as Global Positioning System (GPS), robotics, and navigation systems to improve the efficiency of their products. The increasing prevalence of small landholdings is driving the demand for compact farm machinery like power tillers.

Market Segments:

Government schemes such as Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Krishi Sinchayee Yojana accompanied by the continued government focus on subsidies for farming and ease in financing availability benefited the tractor market in India. India is also amongst the prime manufacturers of tractors in the world along with USA and China. Eicher Tractors Limited; Tractors and Farm Equipment Limited (TAFE); Gujarat Tractors Limited; Escorts Limited; and Mahindra & Mahindra Limited are some of the major manufacturers in India.

To boost the market further, in June 2022, the Indian bank collaborated with TAFE and TMTL (TMTL Engines Division is a unit of TAFE Motors and Tractors Limited (TMTL)) to ease the process and lower the interest rate of tractor loans in the country. This will benefit tractor ownership in rural India as well. The use of tractors is high in the agrarian zone of northern India, principally Punjab, Haryana, and Uttar Pradesh. In the southern and western regions of India - mainly Andhra Pradesh, Tamil Nadu, and Maharashtra - the adoption rate is low.

Market Drivers:

The increase in the use of machinery in agriculture is promoted by the declining number of labor in the fields owing to increasing opportunities for labor in manufacturing and service sectors. The shift of labor is also influenced by the uncertainty of income in agriculture compared to more regular incomes offered by non-agriculture sectors.

Medium-level farmers in India are struggling with having to pay higher wages to those laborers who are still working in the agricultural sector. Further, a decline in young people’s participation as paid labor in agriculture also partly contributes to the shortages of agricultural labor.

Key deterrents to the growth of the market:

The input cost as well as the maintenance cost for agricultural machinery has increased significantly because of price fluctuations in the steel industry. This is because of the rise in the rate of iron ore and spurred demand for steel. Therefore, agricultural equipment such as tractors, harvesters, and rotavators are expensive since steel is used as the primary raw material for manufacturing this machinery.