India's Contribution to the 6.5% increase in Global CAGR for Powered Agricultural Equipment Market

2022-03-23 11:17:20 UTC | Agriculture
India's Contribution to the 6.5% increase in Global CAGR for Powered Agricultural Equipment Market

India is an active exporter of agri-machinery to 147 countries like the US, UK, Germany and Italy. The global demand is expected to hit 279.5 Billion USD by 2025, increasing from 2018 to 2025 at a CAGR of 6.5%.


Market Analysis:


The top 5 countries that India exports the highest dollar value of agri-machinery are the USA (11.06 Million USD), Germany (4.95 Million USD), Nepal (2.77 Million USD), Hungary (1.72 Million USD), Kenya (1.42 Million USD). Each with a share percentage of 27.04, 12.1, 6.77, 4.21, and 3.74 respectively. The total export value of agri-machinery in these countries is 21.92 Million USD. These top 5 countries account for over 53.59% of the total agri-machinery export from India. 


The USA is the largest market for Agricultural Machinery export from India. In 2020-2021 (Apr-Nov), the USA imported 11.06 USD million worth of Agricultural Machinery from India. Among the top countries, the USA market share of the total Agricultural Machinery export shipments from India is 27.04%. The next spot is Germany, with the Agricultural Machinery shipment value being 4.95 USD Million. A share of 66.28% of the Agricultural Machinery export value from India is held by the top 10 countries in total. 

Considering the top trading partners which import Agricultural Machinery from India, Mauritius recorded the fastest growth in their import shipments from India compared to previous years. Uzbekistan is at the last with the least amount of imports from India.


Market Segmentation: 


The Global and Local Agri-machinery market can be segmented by using various criteria: 


The coronavirus/pandemic has largely impacted the purchase behaviour of customers globally. Even after surviving the pandemic, India seems to be doing much better than last year in terms of its contribution to the powered agricultural equipment market. In recent years, agricultural mechanisation has been progressing steadily. A steady curiosity and understanding are being developed in the farmers subject to the application of Mechanical pieces of equipment to power their farming activities. Some of the major factors that have driven the market for the past many years are:  



Labour Shortage: This is one of the major reasons that has led to the mechanisation of agri-machinery. A ripple effect is a cause for labour shortage even in countries that are rich in labour like India. The large scale migration from rural to urban areas that promote different rural employment schemes creates a huge labour shortage in rural localities that are rich in agriculture. Many such schemes restrict migrant labourers from Bihar, UP and others into Punjab and Haryana during the crucial sowing and transplantation season. Thus due to the shortage of labourers, a sharp increase in the demand for farm machines is seen. 


Ease of Financing: A large number of banks and microfinance institutions have been set up all across rural India for the support of the Agri industry. This has provided many farmers with easy availability of credit to purchase farm machinery.


Government Incentives: Government actively works towards providing Incentives in the form of subsidies, low import duties on agricultural machinery and easy financing schemes. Thus the Indian government has also been a major driver of the farm equipment market in India. Some of the subsidies in favour of farmers owning machinery are Rashtriya Krishi Vikas Yojana (RKVY), National Food Security Mission (NFSM), Sub-Mission on Agricultural Mechanization (SMAM), and NABARD loans in India. 


Rising incomes: Due to strong economic growth and agricultural productivity, the income levels of rural households have been continuously increasing over the last few years. This is one of the many reasons that enabled farmers to significantly increase their spending on agriculture mechanization.


Large Untapped Market: Despite strong growth in recent years, the penetration of tractors and several related types of equipment remains relatively low. This indicates a major loophole in the market that can be captured with continuous innovation and cost-cutting machinery.


The emergence of Contract Farming: Contract Farming is expected to strongly boost the agri-equipment market. It enables farmers to get the benefits of technology, training and financing. It is studied that the revenue earned from contract farming is 11 percent higher than average non-contract farming. 


Recent News: 


There is a scope for improvement in terms of product innovation and availability of retail finance for small farm machinery. If made available, the mechanization of the farms is predicted to increase rapidly. This will help reduce the cost by 20 percent and improve productivity by 30 percent. With plans to double Farm Mechanization within ten years, the government must work on supporting small utility machines that are to be used by smallholder farmers. The powered machinery market in the agricultural industry lacks new and modern innovations. To counter this, VST, the largest maker of power tillers, launched and claimed that 95 DI Ignito is India’s first 9HP electric start power tiller. It is partnered with the launch of a range of fuel-efficient brush cutters to meet the needs of small and marginal farmers.



Conclusion: 


The powered agricultural machinery market in India is evolving rapidly. The industry has always focused on innovation and flexibility to support smallholder farmers that are major risk-takers. India is also coming up with solutions to boost exports that are at the highest in recent years. To boost export it must focus on building better trade relationships with other countries besides those that are being targeted by major competitors of such as Germany ($1.03B), the Netherlands ($989M), the United States ($713M), China ($659M), and Italy ($625M). 


Questions: 


How does India manage such a high volume of exports of agri-machinery to so many countries?

India exports agri-machinery to nearly 147 Countries. The USA is India’s largest Importer and Uzbekistan is the least. There are about 35 top exporting ports in India that trade Agricultural Machinery from India. Nhava Sheva Sea exports the majority of Agricultural Machinery shipments from India with a share of 52.0%, followed by Bombay Air Cargo with 13.0%.


What are the major exporting ports in India that deal in agri-machinery? 

There are about 35 top exporting ports in India that trade Agricultural Machinery from India, Nhava Sheva Sea exports the majority of Agricultural Machinery shipments from India with the share of 52.0%, followed by Bombay Air Cargo with 13.0%.


Which is the top importing port for agri-machinery from India?

Felixstowe port, UK solely imports 3167 shipments of Agricultural Machinery from India and holds the largest share of 32.0%.


What is the objective of providing subsidies for farmers to own their agri-machinery? 


What are the different types of agri-machinery covered through various government incentives offered? 

The list includes some of the machinery namely, 

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