The $8 billion India tractor and agriculture equipment market is set to witness heightened rivalry with foreign heavyweights like CNH Industrial, one of world’s largest tractor manufacturers, looking to stretch its muscle through new product addition, manufacturing expansion and possible local partnerships.

The company, which is India’s sixth largest tractor seller, makes tractors under the New Holland brand in the 50hp and above segment. It also sells agricultural equipments like harvester and post-harvest machines generating nearly $1 billion in revenues per annum.

The deal between the Nanda family-led Escorts and Japan’s Kubota a few months ago set the tone for what the market perceives to be an aggressive chase by participants for market share grabbing. The Indo-Japanese entity said it is targeting to be the largest tractor player in India beating the current heavyweight Mahindra & Mahindra (M&M).

CNH said the company is ‘open’ to partnerships in India, when asked if the company would like to take the acquisition route for growth in the country.

In an interview with BusinessLine, Raunak Varma, Managing Director, CNH Industrial (India) said, “We are definitely open to it. We are open to partnering with players who can bring some value to the table. Most Indian OEMs have gone the inorganic way for growth. The barrier of entry is pretty high right now, therefore the foreign OEMs are acquiring stakes in domestic players.”

Varma, however, clarified that presently the company is not talking to anybody for a partnership but asserted that the partner has to bring in valuable strengths to the table like competitive production costs. New Holland and John Deere are greenfield players who have set up their independent products and distribution reach in the country without partnerships.

New Products

“Our products have been in the higher than 50hp range which make up more than half of the market. The meat of the market is the 40-50 hp range and that’s a segment where we are looking to introduce products. We are looking to double our market share of 4 percent over the next three years. Our agriculture segment generated ₹6500-7000 crore turnover in 2021. We aim to hit a $1-billion revenue company soon,” Varma added.

CNH is pumping in ₹350 crore for increasing its tractor production by 60 percent to 80,000 in the next one year from 50,000 last year. Product-related investments will be in further addition.

Export and R&D

CNH has set up four research and development (R&D) centres in India which includes a unit for construction equipment as well. The newest one which has been set up in Gurgaon will become the biggest for the company in the world employing 1,000 people in the next two years.

“Our Noida facility houses R&D for tractors, Pune for harvesting and Pithampur for construction equipment. We have now established a global R&D centre in Gurugram, where we expect to consolidate the R&D from high-cost countries,” Varma added.

Besides R&D, the company aims to make India the base market for utility tractors. CNH has established itself as a value player across global markets. From a total of 50,000 tractors last year, CNH sold 14,000 in the export market including 5,000 in NAFTA market, followed by South Africa and SouthEast Asia. 

‘India offers an edge’

CNH has plans to offer components made in India to its global sister concerns thereby presenting an opportunity for increased parts purchases.

“Given the supply chain challenges we have seen, India offers a hedge against China for the group. As a group we are now looking at how we could leverage India more for a ‘best cost country’ and the first target is to do half a billion more purchasing from here. Purchasing as of 2021 would be $600 million and we wish to double it,” Varma added.

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