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The tractor industry ended 2020-21 with a growth of more than 20 per cent, selling a record 9-lakh-plus units, surpassing all expectations and projections.
While the final numbers are awaited, the FY21 growth rate is expected to be highest in a decade.
Positive growth
The strong growth in FY21 comes after a 10 per cent decline in FY20 at 7.09 lakh units.
Though the post-lockdown phase saw a gradual demand recovery in all vehicle segments, tractor sales, which depend on a strong rural economy, remained robust.
“Healthy farm cash flows across regions, stable crop prices, supported by government’s focus on procurement, and healthy reservoir levels and government support programmes (including direct benefit transfers) supported the industry demand. All these factors helped the industry record a growth in volumes of 25-26 per cent in FY21 and touch an all-time high, said Rohan Kanwar Gupta, Assistant Vice-President & Sector Head, Corporate Ratings, ICRA.
Best year
For the market leader Mahindra & Mahindra, FY21 proved to be the best year after 2017-18. After a single-digit decline in FY20 and a single-digit growth in FY19, the company posted an 18 per cent increase in tractor sales in FY21 at 343,833 units (291,901 units in FY20).
“The most important factor during Covid-19 was the least disruption to rural and agri segments, supporting demand for farm equipment,” said Mitul Shah, Head of Research at Reliance Securities.
International Tractors Ltd, manufacturer of Sonalika tractors, recorded a 42 per cent growth at 11,17,503 units in FY21 compared to 82,958 units in FY20.
Raman Mittal, Executive Director, Sonalika Group, said the company achieved a significant domestic growth of 41.6 per cent in FY21, which is the highest in industry and surpassed the industry growth (estimated at 26.7 per cent) in the most challenging year.
Escorts’ domestic tractor volumes crossed one lakh mark for the first time.
Momentum to continue
Industry representatives and experts see tractor sales momentum continuing in FY22 too. “Tractor demand is expected to remain strong as rabi harvesting is progressing well along with the onset of sowing of summer crops in select markets,” said Hemant Sikka, President, Farm Equipment Sector, Mahindra & Mahindra.
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