If November volumes are an indicator, tractor sales in 2020 are likely to touch an all-time high but only if the ongoing farmer protests do not hurt production and sales in December.
A robust increase in demand through November, when sales jumped 51 percent over the same month last year, narrowed the year’s deficit with 2018, the best-ever year for the tractor industry.
Data supplied by the Tractor and Mechanisation Association (TMA) show that tractor sales in the country between January and November stood at 7.41 lakh. The same period in 2018 saw sales of 7.55 lakh tractors. The industry ended 2018 with domestic sales of 7.97 lakh tractors.
Against the grain
Both 2018 and 2020 have been peculiar years for the industry, where, despite the odds, demand for tractors remained upbeat. In 2018, there was below-average rainfall and drought-like situations in many States. The year also saw several States battling floods.
This year there was a near-total wipeout of tractor production and sales activities following the Covid-induced lockdown announced by the government. Consequently, April and May, which typically generate 17 percent of yearly India volumes, contributed just 9 percent this year.
A record improvement in agricultural harvests, the government’s rural development schemes, higher Minimum Support Price (MSP) and record water levels in reservoirs resulted in a 9 percent increase in tractor sales during the January-November period this year. Thanks to a bumper crop, rural demand accounted for the lion’s share of two-wheelers and car sales.
Increased governmental support through schemes such as MGNREGA and PM-KISAN have helped in creating employment and easing the liquidity pressure on rural incomes brought about by large-scale reverse migration from urban to rural areas after the imposition of a nationwide lockdown, said a note by ICRA.
As per research and rating agency CRISIL, national tractor volumes should end the current financial year with a growth of 10-12 percent, up from the earlier projected 1 percent growth predicted at the start of the year.
Farmer protests
On December 9, farmer unions rejected the Centre’s draft proposal to amend the new agriculture marketing laws. They also promised to intensify their agitation by blocking the Delhi-Jaipur and Delhi-Agra expressways and all roads leading to Delhi.
This could result in the disruption of the supply chain, fear market watchers.
“There are several tractor-making and tractor parts-making plants in the North of the country. It is very likely that the protest could hinder free movement of supplies,” said a Mumbai-based analyst.
Mahindra & Mahindra’s Swaraj brand, as well as Escorts, International Tractors and other smaller brands have plants located in Punjab and adjoining areas.
Retail market share
As per retail sales data shared by FADA, Mahindra & Mahindra continued to control 41 percent share of the domestic tractor market by the end of November.
Chennai-based TAFE had a market share of 17.59 percent (including the market share of Eicher Tractors), while International Tractors, which sells the Sonalika brand of tractors, ranked third with an 11.65 percent share.
India’s top five tractor-making companies control 89 percent of the domestic market, leaving more than a dozen others to fight for the remaining 11 percent. The industry is dominated by Indian brands, with John Deere being the only foreign brand to have a presence in the top five, with a share of just under 9 percent.
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