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Neha Kaushik

Eicher and Escorts have already announced the reduction, others are expected to do so in the next couple of days.

New Delhi , July 14

FOLLOWING the exemption of excise duty on tractors announced in the Union Budget, leading tractor manufacturers have decided to reduce prices of tractors by about 3-4 per cent.

In a meeting held by the Tractor Manufacturers Association (TMA) earlier this week, the companies reached a consensus to reduce prices by 3-4 per cent "as quickly as possible".

While companies such as Eicher and Escorts have already announced the reduction, many others are expected to do so in the next couple of days.

According to Mr Rakesh Chopra, Business Head - Agri Machinery, Escorts Ltd, the reduction is in the region of Rs 4,000-5,000 to Rs 10,000-12,000 depending on the model.

The TMA meanwhile is all set to roll out an informative campaign, in primarily the vernacular media, announcing not only the price reductions but also explaining why the tractor prices have not been reduced by 16 per cent, the previous excise duty level. "The aspirations of the farmer had been raised after the exemption of excise duty on tractors was announced. The farmers were expecting a commensurate price decrease," Mr R.C. Jain, President, TMA and Vice-Chairman, Eicher Group, said.

Tractor makers cannot pass on a commensurate 16 per cent benefit, as the companies will not be able to avail themselves of Modvat credit following the exemption. The net benefit thereby to these companies would only be about 3-4 per cent, which is now being passed on to the customer. The TMA has already sent a representation to the Finance Minister requesting that tractor makers be exempt from paying excise on inputs (components) as well.

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