New Delhi: Tractor sales in India saw a 28.7 per cent year-on-year growth this year from April to November, recording a jump at a time when the auto industry is witnessing a pandemic-induced slowdown. In November alone, tractor sales recorded a y-o-y growth of 51.2 per cent
According to Tractor and Mechanization Association (TMA) data, 82,330 tractors were sold in November as compared to 54,432 in the year-ago period.
This rise in tractor sales came on the back of growth even during the January through September period, which included months of lockdown. During these months, 5,43,936 tractors were sold across the country, a nearly 4.72 per cent rise from 5,19,395 in the comparable year-ago period, according to TMA.
Furthermore, demand for tractors remained close to or higher than their number produced. According to TMA, 90,327 tractors were produced in November, just above the sales figure. In October, 1,08,873 tractors were produced while 1,23,883 were sold.
But while tractors have seen a fast growing trend, the auto industry has been slow in its growth. In November, passenger vehicles grew 4.17 per cent, while three-wheelers and two-wheelers saw a steep decline of 64.98 per cent and 21.40 per cent, according to data shared by the Federation of Automobile Dealers Associations. In the previous month, two-wheelers had recorded a drop of 26.82 per cent, while three-wheelers fell 64.50 per cent.
Monsoon, waivers, weddings
Experts in the industry revealed that the increase in tractor demand could be attributed to good monsoon, better finance availability and, even, lesser expenditure on weddings.
Akshay’s Sangwan, executive director at tractor maker Sonalika Industries, said, “The current year’s increase in demand for tractors is largely driven by good monsoon, better retail finance availability, increased MSPs and market rates realisation.” He also pointed out that these trends were not limited to India as growth has been witnessed in export markets as well.
Sonalika sold 11,478 tractors in November, marking a 71 per cent growth from last year. Between April and November, the company recorded 92,913 tractor sales.
Sangwan was optimistic about the next fiscal as well. “Good rainfall has ensured healthy produce output for the coming season as well. So, we foresee a robust demand to continue in this segment next year as well,” he added.
Escorts Ltd, another leading tractor manufacturer, registered a near 32 per cent rise in domestic sales in November.
Explaining the reasons behind this, Bharat Madan, Group Chief Financial Officer, Escorts, said, “For one, the agricultural sector wasn’t impacted that much by the pandemic, in comparison to urban areas.” He said the growth in the last two months has been good which showcases that a good harvest was seen last season.
Agriculture experts also pointed at loan waivers to explain the sales.
“If you look at the long term trend, tractor sales had been declining for quite some time. They had picked up in the last two years and partly because loan waivers have allowed more farmers to access loans and the second is lower interest rates,” Himanshu, associate professor, economics, Jawaharlal Nehru University.
There are other sociological factors at play too. Siraj Hussain, former Union agriculture secretary who is currently working as Visiting Senior Fellow at think-tank ICRIER, said industry and farmers told him “an interesting reason” behind this rise.
“This year, due to the Covid-19 pandemic, especially during the lockdown, people’s expenditure on weddings was much lower than normal. Since they saved a lot of money on ceremonies they used their savings for buying tractors,” Hussain said.
Sales in states
According to FADA’s October data, the highest tractor registrations were recorded in Uttar Pradesh — 10,373. Rajasthan recorded the second-highest sales at 7,857, followed by Maharashtra, at 6,659 tractors.
According to experts, southern markets have also seen a rise. Madan acknowledged this growing trend. “We are seeing rapid growth happening in the southern market. States like Tamil Nadu, Andhra Pradesh, Karnataka, Telangana… They have grown up to 46 per cent in the first six months or so,” he said.
He added that migrant labourers returning to their home states during the lockdown may have affected sales in northern states.
Himanshu reiterated, “States like Punjab have too many tractors, they are saturated. Now, the demand is increasing in areas where the extent of mechanisation is not that high.”
Tractor sales down in Punjab & Haryana
Punjab and Haryana, considered to be India’s agricultural hubs, saw a fall in tractor sales earlier in the year.
According to the states’ transport department data accessed by ThePrint, Punjab registered 10,831 tractors between 1 March and 23 September this year while Haryana registered 17,824 tractors in the same period. In the year-ago period, Punjab had registered 12,443 tractors while 23,124 tractors had been registered in Haryana.
Kahan Singh Pannu, former Punjab agricultural secretary, said, “People are purchasing replacement tractors here wherein they sell the tractors they own to get better ones.”
He added other states could be buying more tractors, but hubs like Punjab and Haryana were purchasing tractors with at least 50-60 HP as opposed to 30 HP in other states.
“Punjab has around 5 lakh tractors against a requirement of 1-1.25 lakh tractors, so, in the uncertain Covid times, buying a new tractor was not a priority,” agricultural expert Raman S. Mann said.