The market research agency says, easy availability and access to low cost credit is also the reason for growth in the market
New Delhi | 26 Oct 2017
Despite sagging GDP, badly hit markets by demonetization and GST, the Indian agricultural machinery market is set to grow at a compounded annual growth rate ( CAGR) of around 6.6 percent to reach INR 769.2 billion by FY 2022.
That’s what the latest report of Ireland based market research agency, Research and Markets says. The report was released on Tuesday.
The market research agency mentioned, “The boost in agriculture machinery market is due to the growth in India’s agriculture sector”.
“Government initiatives such as Kisan Credit Card, National Mission on Agricultural Mechanization (NMAM), and Tractor Subsidy Scheme have contributed to the growth of the machinery market”, it further added.
It also said, “Easy availability and access to low cost credit is another reason for growth in the market”.
“Strong governmental regulations on the availability of finance for agricultural mechanization tools, rural development, and high irrigation potential will drive the agricultural farm machinery industry in India”, it estimated.
The agency also commented, “High cost of agricultural machines is one of the major challenges hampering the growth of agricultural machinery market in India. Agricultural machines are capital-intensive. As a result, it is a major investment for small and marginal farmers. The overall land holding in India is fragmented, which is another threat to the market. Fragmentation of land leads to lower productivity levels, as farmers cannot make effective use of machinery on small farms”.
India is the largest tractor market in the world and the 41-50 HP is the largest selling segment. Tractors and power tillers have played a vital role in the overall development of agriculture in the country.
In a similar report last year , the credit rating agency ICRA had projected the CAGR of 8 to 9 per cent in tractor volumes (domestic and exports) for next five years , saying the long term drivers remaining intact and also keeping in mind the impact of demonetization.
Recently, Crisil has also estimated tractor sales to go up by 12-16 % for the festive months from September to November as compared to last year’s figures during same period.