Making India a Global Powerhouse in the Farm Machinery Industry

Agricultural progress in India is the result of a coordinated interplay of man-machine material contact. While food grain production reached a record high of 314.51 million tonnes (Mt) in 2022, India is experiencing a parallel increase in input costs and deterioration of natural resources due to poor input utilization. Farm mechanization provides an opportunity to retain youth in agriculture by improving comfort and revenue over traditional farming.

In India, the proportion of farmers to total workers fell from 59.1% in 1991 to 54.6% in 2011 and 39.4% in 2021. Total farm electricity availability from all sources was 0.3 kW ha-1 in 1960 and climbed to 2.54 kW ha-1 in 2019-20. The aim for average agricultural power availability by 2030 is 4.0 kW ha-1 for timely and precise field activities. The Net sown area per tractor decreased from 487 ha/tractor in 1975-76 to 18 ha/tractor by 2019-20 as the population of operational tractors increased to 7.5 million. With over 0.8 million tractor sales per year, India has emerged as the world's top tractor producer. Along with tractors, there has been a considerable increase in power tillers, combine harvesters, diesel engines, and electric motors in relation to positive crop productivity. The sales of power tillers, combine harvesters, diesel engines, and electric motors climbed by 0.50 million, 0.05 million, 11.50 million, and 7.50 million, respectively.

Farm mechanization is essential for reaching the targeted output levels, efficient input utilization, and timeliness in the various farm operations due to the continuously rising production and demand for agricultural products and output. However, monetary constraints and small land holdings are two key roadblocks to efficient agricultural mechanization deployment. Farmers, manufacturing industries with their networks, government, and non-governmental organizations are all working to promote adequately mechanized agriculture. The Government of India recognized the need for a dedicated Mission to promote farm mechanization, and the Sub-Mission on Agricultural Mechanization and Farmer's Welfare (SMAM & FW) was developed as a vehicle for implementation during the XII Plan era.

Farm Machinery Industry in India

Between 1900 and 2020, agricultural mechanisation, including pre-and post-production, transitioned from subsistence farming to robots and artificial intelligence. After the year 2010, agricultural mechanisation and post-harvest processing entered a new era of technology known as precision agriculture and post-harvest processing. The overall mechanisation level in wheat is 69%, 50% in rice, 45% in maize, 41% in pulses, 38% in oilseeds, 35% in cotton, and 33% in millets and sugarcane. The current total agriculture mechanisation rate is 47% in India.

Precision technologies aid in the judicious application of seeds, fertilisers, pesticides, and water, among other things. Similarly, using digital technology for harvesting, packaging, transportation, storage, processing, and marketing lowers post-harvest losses to a bare minimum.

The new digital farming (DF) or smart farming technology focuses on real-time agricultural data collecting and decision-making. Digital farming also incorporates the concepts of precision farming, smart farming, and a wide range of technologies, the majority of which have various uses along the agricultural value chain. These technologies include cloud computing/big data analysis tools such as blockchain and smart contracts, the Internet of Things (IoT), digital communication technology (mobile phones), image processing, and digital platforms.

Precision agriculture research is in its early stages, and technologies such as sensor-based embedded systems (soil nutrient, temperature, fertility, and moisture gradients), guidance systems (often enabled by GPS, GNSS, RFID), variable-rate input technologies (VRTs), automated machinery (automatic control and robots), and advanced imaging technologies (including satellite and drone imagery), NIR spectroscopy, hyper-spectral, X-ray, and magnetic resonance imaging are being developed.

The farm machinery industry has three tiers. The industry is dominated by approximately 100,000 village-level craftsmen who supply, repair and maintain hand tools in villages. At the next level, there are 2,500 small-scale producers who generate enhanced farm equipment. The organised agricultural machinery sector contains approximately 250 medium to large-scale firms that manufacture advanced machinery, provide after-sales service, and innovate goods and procedures. Countries with higher degrees of agriculture mechanisation can boost productivity and thus yields. Furthermore, increased mechanisation has a favourable impact on employment.

Number of Equipment Required: Overall and Number per 1,000 hectares

Source: National Council of Applied Economic Research (NCAER)

Penetration of Mechanisation across Farm Operations

 Source: National Council of Applied Economic Research (NCAER)

Modern Farm Machinery

• Plough

Plough, a major tillage equipment, functions as a tractor implement attached to a tractor and assists in efficiently tilling the soil. It is used to prepare the field for planting during the planting season. Ploughs of various varieties (mould-board plough, reversible plough, disc plough) enable farmers to transform the soil into a nutrient-rich seedbed for optimal plant growth.

• Combine Harvester

It functions as a comb cutter to simultaneously chop and thresh the mature crops at the same time. A combine is one of the most advanced pieces of machinery that helps farmers save many hours of the day spent on harvesting operations.

• Rotavator or Rotary Tiller

A rotavator, also known as a rotary tiller, is a multipurpose piece of tillage equipment that turns up the soil using a set of blades. It is used to break down soil in lawns, farms, and gardens, and other places. Because of its simple design and great tillage efficiency, rotary tillers have substantially increased use in agricultural operations.

• Disc Harrow

The disc harrow is one of the most important tillage devices that farmers may invest in to boost their output. This tillage equipment is also utilised in the secondary tillage process since it aids in breaking up lumps of soil easily, efficiently, and quickly to provide a rich finish when preparing a final seedbed. It also allows farmers to control weeds around the plants after the crop has been sown and matured.

• Leveler

The tractor makes the soil more even, smooth, and surface achieved, allowing it to provide a moist environment for crops and reduce the use of fertilisers, seeds, chemicals, and fuel.

Exports and Imports of Total Farm Machinery and Non-tractor Farm Machinery

The non-tractor farm machinery sector is broadly classified into two types: tractor-mounted machinery and self-propelled/hand-driven mechanised/power farm machinery. In some farm machinery, such as ploughs, disc harrows, 'agricultural & horticultural machinery,' and threshing machinery parts, India has a disclosed comparative advantage (i.e., it can create things at a considerably lower opportunity cost).

As depicted in the below graph, tractor exports drive farm machinery exports, whereas non-tractor farm machinery imports drive farm machinery imports. Further, the direction of trade is asymmetrical where 53% of non-tractor agricultural machinery imports are coming from China, but the export markets are relatively more varied. India has a very high trade surplus in total farm machinery. Although India is both exporting and importing non-tractor farm machinery exports form a relatively small proportion of total farm machinery exports and imports form a relatively high proportion of total farm machinery imports.

Government Schemes

The Indian government has introduced a number of programs and policies to promote farm mechanization:

• Sub-Mission on Agricultural Mechanization (SMAM)

The Central Government introduced the Sub-Mission on Agricultural Mechanization (SMAM) in 2014-15, which provided subsidies for the purchase of various types of agricultural implements and machinery used for tillage, sowing, planting, harvesting, reaping, threshing, plant protection, inter-cultivation, and residue management. Until 2021-22, SMAM was the largest central government stand-alone farm mechanization scheme. In the Union Budget of 2022-23, it was combined with Rashtriya Krishi Vikas Yojana (RKVY). Between 2017-18 and 2021-22, the total Budget projection was US$ 578.19 million (Rs. 4,765.29 crore), while the actual total expenditure was US$ 494.95 million (Rs. 4,079.27 crore) (86%). SMAM provides a 40% subsidy on straw rakes, straw balers, loaders, and other equipment. Crop residue is collected and packed into bales that can be conveniently transported to electricity-producing units.

• Custom Hiring Centers (CHCs) have been established under a SMAM plan, under which individual farmers can get a subsidy at 40% of the project cost up to a maximum of US$ 72,800.94 (Rs. 60 lakh), and a group of farmers can receive a subsidy at 80% of the project cost up to a maximum of US$ 12,133.49 (Rs. 10 lakh). The Farmers in the North-Eastern Region (NER) are given special consideration, a group of NER farmers are given a 95% subsidy up to a project cost of US$ 12,133.49 (about Rs. 10 lakh) to develop CHCs. A multilingual smartphone app called CHC-farm Machinery assists farmers in locating local Custom Hiring Centers (CHCs) where they can rent machinery for farming.
• Farm mechanization is a component of significant programs such as the Rashtriya Krishi Vikas Yojana (RKVY), the Mission for Integrated Development of Horticulture, the National Mission on Oilseeds and Oil Palm, and the National Food Security Mission (NFSM).
• The government provides a 50-80% crop residue management machinery subsidy. Some farmer organizations are receiving financial help worth 80% of the project cost to create Farm Machinery Banks for custom hiring of agricultural residue management machinery.
• The Kisan Credit Card (KCC) Scheme enables farmers to purchase agricultural supplies and withdraw cash to meet their agricultural and consumer needs.
• While some other States are providing subsidized farm machinery via Direct Benefit Transfers, Odisha stands out as a best practice. State governments in Kerala, Madhya Pradesh, and Tamil Nadu offer farm machinery to farmers at a discounted rate through their Agricultural Departments.

Road Ahead

Farm innovations pushed agriculture to the economic edge, producing a plethora of commercial crops that have given rise to new agri-businesses or industrial agriculture. The rapid expansion of mechanically driven equipment over the last six decades has greatly altered crop yield and established a clear association between farm power availability and food grain productivity. Mobile farm power sources (tractors, draught animals, power tillers, combine harvesters) and stationary farm power sources (diesel engines and electric pumps) have both considerably contributed to the increase in food-grain output in India. India has a comparative advantage in tractors. Tractor-mounted machinery is a complementary commodity with a domestic market among large farmers as well as in developed countries. Self-propelled/hand-driven mechanised farm machinery has a local market in small and marginal farmers and emerging and developing nations with similar socioeconomic patterns, such as Asia and Africa. India benefits from both dual structures. India should take advantage of this to elevate small and marginal farmers worldwide while also becoming a global provider of non-tractor farm machinery.