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Farm equipment makers are upbeat over robust demand

Business Standard:  February, 2012

Chandigarh: Farm equipment manufacturers in the northern region, especially SMEs and their vendors, are upbeat over the robust demand for farm equipment in the domestic market. They are betting big on the Indian farm mechanisation market, which is estimated at over Rs 4,000 crore a year (excluding tractors).

There are over 400 SME manufacturers and vendors in the northern region, comprising Chandigarh, Punjab, Haryana and Himachal Pradesh. Some of the SMEs market their product under their own brand name while others sell to large established players.

Using indigenous technology and with the help of competitive pricing, these manufacturers cater to the domestic market as well as export to Sri Lanka, Nepal, Iraq, Iran and the southern African countries.

According to analysts, labour shortages, subsidies by both Central and state governments as well as easy financing by financial institutions have given a boost to this sector, which is witnessing 20-25 per cent year-on-year growth.

Sonalika Agro Industries Corporation Director Rajesh Thakur said, “The farm mechanisation sector has witnessed rapid growth in rural areas in the recent past, because of labour shortages. It is quality, competitive pricing and service which are driving the growth of manufacturers based in the northern region.”

Farm mechanisation has been promoted vigorously by the Central and state governments. Farm implements that recently have been made eligible for bank financing, in addition to existing implements, include multi-crop threshers, sadd drills, rotavator bed planters, tractor-mounted sprayers, potato diggers (manual and automatic), caster threshers, sugarcane cutters and planters.

The state governments provide a subsidy on the purchase of these machines that can go up to 50 per cent, depending on the machine.

In Punjab alone, according to the “state focus” prepared by the National Bank for Agriculture and Rural Development (Nabard), the credit requirement for farm mechanisation in 2012-13 is estimated at Rs 1,748 crore (including tractors). This makes farm mechanisation the third-largest sector in the state in terms of credit requirement, after crop loans and dairy development.

Farm mechanisation in Punjab had until recently been a “tractorisation” process, as the state had about 492,000 registered tractors as on March 31, 2009.

However, the use of other kinds of farm equipment – power tillers, bullock/tractor drawn implements, reapers, threshers, cleaners/graders, zero-till seed-cum-fertiliser drills, raised-bed planters, reapers and rotavators – has also increased significantly over the last few years, making it an attractive sector for manufacturers. In Haryana farm mechanisation is a Rs 1,000 crore market.

The managing director of Haryana-based Ashoka Foundry & Engineering Works, Kapil Gupta, said, “We have been doing very well over the last few years. In order to meet the robust demand, we are expanding our manufacturing capacity.”

His company manufactures agricultural equipments such as automatic and semi-automatic potato planters, seed-cum-fertiliser drills, sugar trench planters, tillage equipment and sugarcane cutter and planters.

Analysts said the factors driving the growth of farm mechanisation in the northern region are high quality, low cost and trouble-free maintenance. Punjab has about 40-60 farm implement manufacturers that focus on the complete value chain of farm mechanisation solutions and cater to both the domestic and the international market.