FICCI Federation House Tansen Marg New Delhi , India

Transcription

1

2

3

4

5 Federation of Indian Chambers of Commerce & Industry and YES BANK Ltd. FICCI Federation House Tansen Marg New Delhi , India Internet: YES BANK Limited 7th floor, Tower B, Building no. 8, DLF Cyber City, Phase-II Gurgaon , India Internet: This report is a product of the findings from FICCI's in-house studies as well as information collected through interactions with its various corporate members, other industry sources and senior government officials. Though utmost care has been taken to present accurate information, FICCI & YES BANK make no representation towards the completeness or correctness of the information contained here in. This document is for informational purposes only. Further, all information / opinions contained in the document are subject to change without notice. This document is not intended to be a substitute for professional, legal or technical advice. FICCI & YES BANK do not accepts any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents.

6 Title Farm Mechanization in India :AStatusPaper Authors Nitin Srivastava Assistant Director Agriculture FICCI Ruchira Saini Assistant Director Agriculture FICCI Ajay Kakra Head North India Food & Agribusiness Strategic Advisory and Research (FASAR) YES BANK Limited Priyank Bharadwaj Senior Manager Food & Agribusiness Strategic Advisory and Research (FASAR) YES BANK Limited Date December 2009 Contact address Agriculture Division Federation of Indian Chambers of Commerce and Industry [FICCI] Federation House Tansen Marg New Delhi Ph: , Fax: Food & Agribusiness Strategic Advisory and Research (FASAR) YES BANK Limited 7th floor, Tower B, Building no. 8, DLF Cyber City, Phase-II Gurgaon Ph: Fax:

7 I. Background 1 II. Status of Farm Mechanisation in India 5 III. Structural Organisation of the Farm Mechanisation Sector 10 IV. Tractor Industry in India 14 V. International Trade in Farm Equipment 17 VI. Policy Scenario in the Country 27 Annexure I Export data pertaining to selected commodities (USD Million) 32 Annexure II Import data pertaining to selected commodities (USD Million) 34

8 Figures / Graphs Exhibit 1: Foodgrains Yield in India 2 Exhibit 2: Productivity and Farm Power Relationship 3 Exhibit 3: Per Unit Cost of Different Sources of Energy 4 Exhibit 4: Share of Different Power Sources in Total Farm Power 6 Exhibit 5: Indian Agriculture Machinery Distribution 7 Exhibit 6: Power Source-wise Development of Farm Equipment 8 Exhibit 7: Region-wise Development of Farm Equipment 9 Exhibit 8: Domestic Tractor Sales over the years 14 Exhibit 9: Class-wise Sales of Tractors 15 Exhibit 10: Share of States in Total Tractor Sales 16 Exhibit 11: Exports Imports of Selected Agricultural Equipment 17 Exhibit 12: Selected Agriculture Equipment Exports 18 Exhibit 13: Export Trends 18 Exhibit 14: Tractors Equipment Exports 19 Exhibit 15: Export Composition 19 Exhibit 16: Selected Cultivation Equipment Exports 20 Exhibit 17: Selected Harvesting & Threshing Equipment Exports 20 Exhibit 18: Selected Post -Harvest Equipment Exports 21 Exhibit 19: Others Equipment Exports 21 Exhibit 20: Selected Poultry Equipment Exports 22 Exhibit 21: Selected Dairy Equipment Exports 22 Exhibit 22: Selected Agriculture Equipment Imports 23 Exhibit 23: Selected Cultivation Equipment Imports 24 Exhibit 24: Selected Harvesting & Threshing Equipment Imports 24 Exhibit 25: Selected Post -Harvest Equipment Imports 25 Exhibit 26: Others Equipment Imports 25 Exhibit 27: Selected Dairy Equipment Imports 26 Exhibit 28: Selected Poultry Equipment Imports 26

9 Executive Summary India's food-grains output has increased manifold over the past sixty years. While the stupendous performance of the agricultural sector is mostly credited to the Green Revolution, farm mechanisation, among other factors, also had a considerable impact on catalyzing food-grains production in the country. However, since the beginning of the 90s, significant changes in trends from the agriculture sector have been noticed. These include, stagnation in yields, changes in consumer preferences, scarcity of labor during peak agriculture seasons, rising cost of production, resource scarcity, and effects of climate change on farming. In this context, among other things, the need for accelerating mechanization capacity in the farming system and broadening its applicability to allied agriculture sectors is immense. Contrary to the popular belief that the benefits of farm mechanisation can be availed by large farmers only, it has been found that small and marginal farmers have been quite open to adopting equipment for tillage, sowing, irrigation, plant protection and threshing etc, the development of which has gained prominence. In terms of power source-wise development of farm equipment, over the years, nearly 45% of all the equipment is animal drawn equipment. However, the country displays significant region-wise variations in the level of farm mechanisation. Penetration of power operated equipment is most in northern states; on the other hand, maximum numbers of animal drawn implements can be found in M.P. and U.P. On the international trade front, India's trade in selected agriculture equipment has grown by about 10 times, in value terms since Of this, exports occupy 70% share, largely on account of tractors, that constitute about four-fifth of the total exports of the selected farm equipment. The exports have grown at a CAGR of nearly 30% since the beginning of this decade. On the other hand, imports that have grown at a CAGR of around 27% in value terms are more broad-based with significant representation from cultivation, past-harvest and dairy equipment in the overall import figures. Farm mechanisation still being in a nascent stage needs significant support from the government for both, increasing domestic penetration and adoption as well as stimulating international trade. Unlike other agricultural sectors, farm mechanization sector has a far more complex structural composition and is majorly influenced by the interplay of a diverse set of factors ranging from financial to agricultural and market issues. It has been observed the sector needs considerable attention from the players in terms of research, development and testing of India specific Farm Mechanization in India :AStatus Paper

10 farm machinery and equipment, standardization and quality control, and education, training and popularization. Consequently, several policy announcements need immediate and a careful attention, these include: Provision of special credit support at lower interest rates to rural individuals, venturing into entrepreneurial use of Farm Machinery through custom hiring Provision of incentives and policy support for the development and promotion of farm mechanization technologies suitable for Dry Land Farming, Horticulture & Orchards. Provision of incentives to support the development of mechanization technologies which helps to conserve resources such as water, soil fertility etc VAT and excise duty exemptions for agricultural machinery and equipment purchased by farmers cooperatives, village level panchayats and agribusiness / clinic entrepreneurs Promotion of Farm Service Centres Farm Mechanization in India:AStatus Paper

11 I - Background Ever since independence, Indian agriculture has continuously provided structural support to the economy. It significantly contributes towards employment generation in the rural sector by employing more than 50% of the total Indian workforce, and more importantly, ensuring food security to the nation. At 233 million tonnes, India's agriculture output has nearly grown five-fold since the early 1950s. The advancements in food-grain production, besides other things, were brought in by early agricultural mechanisation in form of irrigation pumps, tillage equipment, chaff cutters, etc. Moreover, the paradigm changes brought in by Green Revolution have further catalyzed acceleration of farm mechanization across various agricultural activities in the country. Consequently, the dependence on animate power has successively reduced over a period of time. The custom hiring of the farm equipment for tillage, sowing, plant protection, and threshing has further increased the penetration of farm equipment in the farming system. However with time, farm mechanisation needs have also evolved. The present trend in agricultural mechanisation shows acceptability of greater mechanization capacity in the farming system and a scope to broaden its applicability to horticultural, plantations and other commercial crops. Despite the potential, bringing about sustainable growth in the farm mechanization sector still remains a challenge on account of (1) the widely accepted view that the benefits of Green Revolution have run their course, and fresh impetus is needed at cultivation stage to augment yield and further, increase crop production; (2) Changing consumer choices, food preferences are shifting towards processed products driven by health, lifestyle and convenience considerations, which require suitable & efficient post harvest operations; (3) non availability of man power during peak seasons; (4) rising cost of production; (5) resource scarcity and efficient utilization of the same; and (6) climate change issues. These have been dealt with as follows. Despite significant improvements in crop productivity during green revolution period, the crop yields have nearly been stagnant since the advent of 90s and are around 35-50% below international averages. ( refer exhibit 1). Besides, within India, there exists significant difference in yields across different states. Cropping Intensity, which presently stands around 137%, has registered an increase of only 26% since Experts estimate that by 2025, agricultural productivity should increase by 100% 1 Farm Mechanization in India :AStatus Paper

12 to sustain the projected population of billion. This can only be achieved by intensifying agriculture, which is aided by mechanized inputs. It is estimated that the energy input to agriculture would have to be increased from the present level of 1.3 to 2.4kW/ha. Exhibit 1 : Foodgrains Yield in India Yield (Kg/ha) Year Comparative Yields in Prominent Nations USA RUSSIAN FEDERATION CHINA BRAZIL INDIA Yield Major crops (kg/ha) 2007 Wheat Maize Rice Farm Mechanization in India:AStatus Paper 2

13 Strengthening farm power availability will have a major role in augmenting food production in India. Estimates indicate that yield increases are directly proportional to the rate of farm-power employed on field. It has further been estimated that use of proper equipment can increase productivity by up-to 30% and achieved reduction in costs at about 20% (refer exhibit 2). This is because farm mechanisation ensures not only the efficiency of input use and cropping intensity but also ensures timely farm operations management. Productivity(t/ha) & Farm Power(kW/ha) Exhibit 2: Productivity and Farm Power Relationship Farm Power(kW/ha) Average Yield of Food Grain(t/ha) Ensuring timeliness of farm operations becomes even more critical due to uncertainties being witnessed in monsoons during recent past. Estimates point that a delay in sowing of wheat in Punjab beyond first fortnight of November leads to a decrease in yield of about 1.50 quintals per acre. Also, the time taken to perform a sequence of operations is a factor determining the cropping intensity. Farm mechanization is also getting important because of the increasing human labor wage rates, especially since the implementation of Mahatma Gandhi Rural Employment Guarantee Scheme (previously know as NREGA) and increase in cost of up-keep of animal (bullock) labor (refer exhibit 3). For instance harvesting operations on one acre of paddy in most parts of South India, requires around 20 man-days for harvesting and 10 man-days for threshing and packaging, which would cost anywhere between Rs 2500 to Rs The entire harvesting and threshing operations are presently done by hiring combine harvester for 1 hour at a cost of Rs This amount translates into a saving of approximately 20% of net profit from cultivation of one acre of paddy under irrigated conditions. 3 Farm Mechanization in India :AStatus Paper

14 Rs/kWh Exhibit 3: Per Unit Cost of Different Sources of Energy Male Female Draught Animal 7.66 Tractors Sources of Energy Power Tiller Diesel Engine Electric Motor In the absence of mechanization, the ever-increasing wage rate of human labor and cost of upkeep of draught animals significantly increases the cost of production. Also, mechanization helps in timely marketing by quick mechanical transportation and handling of the produce. Moreover, it also reduces the weather risk. Documentary evidences point that temperature and other inter-related dynamics of climate are occurring at a much faster rate due to industrialization, deforestation, encroachment of wetlands, grasslands and higher application of agro-chemicals. Consequently, adoption measures like management of residues instead of burning, fuel saving zero tillage, water and fertilizer management in rice, drainage of waterlogged soils, and preservation of wetlands become an indispensable aspect while considering farm mechanisation policy. In the context of India, zero tillage technology in rice-wheat cropping system, especially, looks promising because of improved productivity, profitability and sustainability. Empirical evidences point that besides saving labour & time, zero-tillage technology has reduced the cost of wheat sowing from Rs /ha to Rs /ha and in the case of rice, a 20.63% reduction in cost of production. Farm Mechanization in India:AStatus Paper 4

15 II - Status of Farm Mechanisation in India Traditionally, blacksmiths and carpenters have been the fabricators of agricultural equipment in India. However the roots of scientific agriculture equipment can be traced to technological developments in England during the nineteenth century. In 1889, ploughs, corn grinders and chaff cutters were introduced in Uttar Pradesh. Besides these, horse drawn and steam tractors operated implements were also imported during the latter part of the nineteenth century, and were suitably modified by small scale Indian manufacturers to suit Indian draught animals. In 1940s indigenous development of equipment gained foothold with the establishment of Allahabad Agricultural Institute that introduced bullock drawn Meston, Shabash & Wah Wah Ploughs. Yet, it was only with the Green Revolution that the farmers gradually started adopting mechanized inputs in response to higher yields and economic returns stemming from application of High Yielding Varieties and higher application of fertilizers. One of the major achievements of 1960s was the development of power thresher with integrated Bhusa (chaff) making attachment, aspirator blower and mechanical sieves for grain & straw separation, which were widely adopted by farmers. The demand for other farm machinery like reaper, combine harvesters & tractors also gradually increased. In this context it is pertinent to note that the then socioeconomic & policy environment had a decisive role in the demand and adoption of mechanized equipment The following graphic represents the successive stages of farm mechanization in India since the end of 1 nineteenth century : 1989 Onwards Emphasis on Dry-land Farming Green Revolution Better seeds Entrance of Organised Players / Multinational Corporations Stagnation in Agriculture Little innovations in seeds, fertilizers & machinery Land Reforms Abolishment of Zamindari System Central Government support for agricultural programmes Improved Irrigation System Better quality & Quantity of fertilizers Easy Availability of Financing Source 1 : Agriculture Equipment Market in India An Overview; Zinnov Consulting, November Farm Mechanization in India :AStatus Paper

16 Mechanisation Scenario with reference to various Power Sources: Historically, human and animal power i.e. animate power has been predominantly used for various farm operations. However, over the course of time, the contribution of animate power in total farm power has been registering a continuous decline, and is being compensated by mechanical and electrical power sources (refer exhibit 4). The last two decades have registered a growth of more than 45% in the availability of mechanized and electrical power, out of which mechanized sources have a greater share. Under mechanized sources of power, it is tractors and power tillers that have a larger share, and are followed by mould board ploughs, puddler, and different types of harrows etc. Exhibit 4: Share of Different Power Sources in Total Farm Power (est) Agricultural Workers Draught Animals Tractor Stationary Engine Farm Mechanization in India:AStatus Paper There has been a significant efforts put in by both the private and the public sector towards promotion and adoption of mechanization in the Indian agricultural system. Further, access to finance for major farm equipment has also played an important role in increasing the reach and penetration of the farm machinery viz. tractors, power tillers, bullock/tractor drawn implements, reapers, threshers, irrigation equipment, hand tools, etc. among rural consumers. In the last decade the use of new equipment such as precision planter, zero-till drill, seed cum fertilizer drill, raised bed planter, improved weeders, plant protection equipment, harvesting and threshing machines, drip, micro-sprinkler and sprinkler irrigation equipment have also increased signifying an increase in the usage of farm machinery. Consequently, it has further been estimated that by the year 2020 the share of mechanical power in the total farm power availability will further rise to 70% (of which mobile power sources would account for 50% & stationary sources at 20%). The second largest source of power would be electrical sources that would account for 25% and lastly animate power would be relegated to around 5%. 6

17 Degree of Mechanisation: Two popular misconceptions about farm mechanisation in India include, (1) farm mechanisation is many a time equated with tractors, and (2) the benefits of farm mechanisation can be reaped by large farmers only. While it is a fact that tractors occupy a nearly 90% of the Indian agriculture machinery market valued at about USD Billion, the remaining being made up by equipment such as harvesters', tillers, and pump sets etc (Refer exhibit 5), it has been documented that farmers, including small & marginal farmers have been quite open to adopting equipment for tillage, sowing, irrigation, plant protection and threshing etc, the development of which has gained prominence. (Refer exhibit 6) However, farm mechanisation in India depicts location specific trends. Exhibit 5: Indian Agriculture Machinery Distribution (USD Billion) Region-wise variation: There is a heavy variation in the level and sophistication of farm mechanization across different regions in India. While the sale of implements and machines like combine harvesters, threshers and other power operated equipment have been increasing almost throughout the country, the Northern States of Punjab, Haryana, Uttar Pradesh (particularly Western and Tarai belt) have achieved a faster growth in mechanization over various Plans, the pace of mechanization in the other states is far from satisfactory. The sale of power tillers in the last three years has shown an increasing trend in a few states. The pace of mechanization in North-Eastern States has not been satisfactory due to constraints such as hilly topography, socio-economic conditions, and high cost of transport etc. The mechanization in Western and Southern states of the country viz., Gujarat, Maharashtra, Rajasthan and certain areas of Tamil Nadu, Andhra Pradesh etc., has increased with the increase in area under irrigation and also with the growing awareness among farmers. 2 Source: Indian Agricultural Machinery Market: An Investment perspective 7 Farm Mechanization in India :AStatus Paper

18 Exhibit 6: Power Source-wise Development of Farm Equipment (%) Manually Operated Power Operated Stationary Tractor mounted Animal drawn Power Operated Walk Behind As the mechanisation technology is location specific, it is subject to change with techno-economic and socio-cultural advancements, different stages of agricultural development and levels of mechanization exist. These are, (1) manual, (2) using manual tools, (3) animal traction and initial motorization using combination of animal & mechanical power, (4) motorization stage using principally mechanical power, and (5) finally automation stage. Development of manually operated implements has been dominant in the eastern region. Maximum numbers of animal drawn implements have been developed in the central region comprising of M.P. and U.P. In the northern region, there has been very low emphasis on the development of power operated (stationary as well as walk behind) implements, as compared to tractor mounted implements. The emphasis on tractor mounted implements in northern region may be attributed to farm holdings being large, higher purchasing power of farmers and shortage of labor during peak seasons. Increase in cropping intensity through assured irrigation has also contributed to increased adoption of tractor mounted equipment with higher capacity (Refer exhibit 7). Farm Mechanization in India:AStatus Paper 8

19 Exhibit 7: Region-wise Development of Farm Equipment Eastern Western Northern Southern Central Tractor mounted Power Operated Walk Behind Power Operated Stationary Animal drawn Manually Operated Tractor mounted Power Operated Walk Behind Power Operated Stationary Animal drawn Manually Operated Tractor mounted Power Operated Walk Behind Power Operated Stationary Animal drawn Manually Operated Tractor mounted Power Operated Walk Behind Power Operated Stationary Animal drawn Manually Operated Tractor mounted Power Operated Walk Behind Power Operated Stationary Animal drawn Manually Operated Use of Major Farm Equipment over the years in India 3 in ' 000 Number of Threshors Use of threshers has increase by nearly 20% since 1994 in ' 000 Number of Harvestors Use of Harvesters has increased by nearly 5 % since 1994 in ' 000 Number of Reapers Use of Reapers has increased by nearly 315% since 1994 in ' Number of Levelers Use of levelers has increased by more than 35% since 1994 in ' 000 Number of Maize Shellers Use of Maize Shellers has increased by nearly 61% since Source: Agriculture Equipment Market in India, Zinnov Consulting, Farm Mechanization in India :AStatus Paper

20 III: Structural Organisation of the Farm Mechanisation Sector Unlike other agricultural sectors, farm mechanization sector has a far more complex structural composition. It has been observed that the sector's performance depends on the interplay of a diverse set of factors, that include, financial aspects, agricultural issues, and market issues. These drivers have been discussed briefly as follows: o o o o o o Capital Investment: Any kind of advanced mechanization needs big capital investment from the farmer. However Indian framers are unwilling to invest in the machines unless they are confident of the returns from his investment. Operational cost: Fuel is the primary driver for any mechanized farm equipment but crude prices are at a record high and there is great shortage of diesel in the country. Usage of oil based farm machinery is not considered a good strategy to follow at such a time. Maintenance cost: Proper maintenance and upkeep of the machinery is necessary for optimal output. If the maintenance of machinery is costly, farmer may avoid investing in such machinery. Financial Support (% of cost): Almost 90% of tractors are sold with the assistance of some financial institution. Sale of farm machinery is driven by factors like financial support, limit of funding (in terms of percentage of the cost), funding/financing institution and the applicant's profile (deciding the credibility of the loanee) Repayment Duration: Longer the duration of the loan, smaller will be the installment. The smaller the re-payment installments, easier it is for the farmers with intermittent source of income to fund his farm machinery purchase. Repayment periods/cycles: If the re-payment cycles are short, the farmer faces difficulty in paying back (as their income is exposed to the vagaries of nature). With a 6 month crop cycle in India, farmers prefer 6 monthly installment cycles matching their realization. Farm Mechanization in India:AStatus Paper 10

21 o o o o o o o o Rate of Interest: Though rate of interest affects the sale of the machinery, it is not the deciding factor. The primary deciding factor is a long duration loan with a favorable repayment cycle, followed by rate of interest. Cost of availing financial support: This cost includes all the expenses (eg. down payment, file preparation charges etc) to be borne by the farmer in order to avail the financial assistance including the down payment. Cropping pattern: Cropping pattern decides the extent of mechanization required for timely operations and achieving optimum results. The scope of mechanization increases with intensive cropping pattern. Crop realization/ price: Price realized by the crop is also an important factor, as it indicates the cash in hand for the farmer. It is directly affected by the support price announced by the central government (from time to time) and the policies by the state government. Land size: Size of land is an important factor for a farmer if he decides to go for mechanized equipment. For a big farm, there is a greater need for mechanization, than for a small farm, where it can be economically unviable to go for mechanization. Availability of labor: Abundant availability of skilled and unskilled labor is also a deterrent to farm mechanization. With abundant cheap labour in supply, farmers prefer to opt for manual labor instead of investing capital in the machinery, considering all other factors. Cost of labor: It is beneficial for the farmer to go for manual labor if it is abundantly available at cheap rates, though it adversely affects the mechanization possibility. Irrigation is one of the major energy-intensive operations. One of the major problems has been the lack of adequate and timely availability of electricity in rural areas due to which the diesel engines are kept as standby source of irrigation. Farm Mechanization and Employment: Contrary to the commonly held belief of reducing employment, farm mechanization provides different streams of employment related to machinery along with reduction in unit cost of production and improvement in competitiveness of the farmer. The use of different machines in 11 Farm Mechanization in India :AStatus Paper

22 agriculture has different types of impacts on employment of human and animal labour. Over the last three decades, the use of animal and human labour have gone down (primarily driven by increase in cost of upkeep and increase in wages respectively) while mechanization continues to gain popularity despite the increase in cost of farm machinery and the multiplier impact of the rise in operational cost. Unemployment, if any, on account of farm mechanization can be attributed to the use of tractors, threshers, combine harvesters etc. However, these machines bring timeliness and remove drudgery from farm operations. Economics of Farm Mechanization: Mechanization is all about scales of operation. If scalability is lacking, farm mechanization is not economically viable. For example in order to have an economically viable operation, the minimum usage of a tractor should exceed a minimum of 1000 hours per annum. Experts believe that innovative Custom Servicing or a rental model for high cost farm machinery such as combined harvester, rotavator etc can be adopted by private players or state or central organizations in major production hubs. Although the rental model already exists in a unorganized manner, institutionalization of such practice may provide incremental benefit for the farmers Challenges in Farm Mechanization: The farm mechanization sector is faced by various challenges related to product, technology, markets, operations, legislation, policy framework and other related areas, these challenges pose a serious impediment to the growth of the industry. Few of the key challenges faced by the farm mechanization industry are discussed below o Research, development and testing of India specific farm machinery and equipment : Land tillers and tractors serve the basic function but there is an urgent need to develop a machinery especially suitable to Indian farming conditions such as small farms, dry farming, and for the operations such as paddy transplanting, sugarcane planting, potato digging, cotton picking, spraying tall plants such as fruit and forest trees etc. o Standardization and quality control: As the majority of customers are cost conscious, quality of the product takes a major hit. In addition, the inability of local low cost manufacturers to come up to the levels of standard designs of equipment also poses a big challenge to farm mechanization. Farm Mechanization in India:AStatus Paper 12

23 o Education, training and popularization of farm equipment: Knowledge about selection of machinery is insufficient. The farmers as well as artisans lack adequate training for efficient usage of the machinery. There are inadequate service centers for proper upkeep of the machinery and the market lack's regulations on custom hiring (rental) services. These are the major challenges which need to be addressed on priority. Issues in Farm Mechanization: Mechanization are discussed below: The major issues in Farm o Soil types: Harder the soil more is the requirement of mechanization while in the case of loose soil; farmer can operate even with low level of mechanization. o o o o Irrigation facility: In the absence of proper irrigation facility, the impact of mechanization is not considerable while sufficient irrigation facility along with mechanization can bring out excellent results in the farm. Cattle Population: The use of machinery such as tractor has resulted in surplus draft cattle population. As upkeep of these cattle is becoming dearer day by day, underutilized cattle are becoming a burden on the cultivator. Farm size: Mechanization needs comparatively larger farms for economical use as the machinery need a larger turning radius. Extension service: Lack of extension services restricts the farmer from taking a wise decision on purchase of suitable machinery, its operation and maintenance. o Seasonal Usage: The farm machinery remains idle for a considerable time on account of seasonal nature of the agriculture and dependence on monsoon for irrigation. Idle machinery means dead investment for the period unless proper alternate use of such machinery in made during the off-season. 13 Farm Mechanization in India :AStatus Paper

24 IV - Tractor Industry in India Indian Tractor Industry is the largest in the world, and accounting for onethird of the total global production. During the past four decades, the tractor industry grew at a compounded annual growth rate of 10%, despite seasonal variations that have an impact on the industry volumes. However, in the long term, tractor industry in India is expected to grow at a CAGR of 5 7%, primarily due to thrust given by the government to increase the agriculture GDP. According to the estimates of the Indian Tractor Manufacturer's Association, the industry is expected to stabilize at about 3'50'000 tractors per year and an additional 60'000 tractor for exports by Industry Status: Since the beginning of this decade, tractor industry was seen shrinking at a negative CAGR of 13.5%, primarily due to stock correction in , and drought in FY The recovery started in mid 2004, which is presently continuing. Since then the industry is growing at a CAGR of 19.5%, which is primarily driven by strong monsoons, increase in lending by nationalized banks, entry of private commercial banks in the agri-lending arena. Besides, the government's focus on increasing agriculture output and rise in Minimum Support Prices also had play on the overall demand for tractors. Year-wise domestic sales pertaining to tractors are given in the following graphic (refer exhibit 8). Exhibit 8: Domestic Tractor Sales over the years Tractor Industry is marked by low bargaining power of both the buyers as well as the suppliers. The fragmented nature of the market further compounds the issue, as such major companies have carved different segments and geographies to operate in. While the restrictions on imports have been removed, the threat of new entrants is only moderate, Farm Mechanization in India:AStatus Paper 14

25 because of comparative scale of economy in the country. However, limited new product introductions, technological breakthroughs, and stiff competition from international players will result in greater consolidation. Besides, a spurt in the demand for LP tractors by golf courses, hotel & airlines industry may force companies to concentrate on aesthetics, noise reduction, and comfort aspects. As the product offerings by the major players are largely homogenous, the key differentiating factor for market players would be (1) having a diversified portfolio or (2) provision of better services like wider distribution network and (3) 5 financial tie ups with banks. With increase in sales in the last few years, capacity utilization has improved and is expected to grow further with the growth in sales volume. As capacity utilization improves overheads per unit will reduce and this in turn will lead to increase in margins. It is expected that operating margins will grow to 10% from current level of 6%. With the increase in margins and no significant capital expenditure, profitability will improve along with ROCE (Return on Capital Employed). Moreover, the expanding exports market for tractors manufactured in India has helped in reducing the dependence of manufacturer solely on the domestic market along with reducing the breakeven point (due to higher margin in export market). This will go a long way in improving capacity utilization and profitability of the tractor industry. Class-wise analysis of the tractor industry: Indian tractor market is traditionally a medium horse-power market, constituting mostly of HP tractors, under Class C. The growth of the tractor industry is closely linked to the growth under this class of tractors. During period October to September 2009, units under were sold in this class, constituting about 32% of the overall tractor sales in the country HP tractors is the next largest category that accounts for about a quarter of the total tractor sales in the country (refer exhibit 9). Exhibit 9: Class-wise Sales of Tractors (Oct - Sep, 08-09) A B C D E E+ 15 Farm Mechanization in India :AStatus Paper

26 State-wise tractor sales: Uttar Pradesh which contributes nearly 19% of the total tractor sale is the largest market in India. Uttar Pradesh is followed by Andhra Pradesh, Maharashtra, Rajasthan, Madhya Pradesh, Punjab and Haryana in tractor sales. (refer exhibit 10). Exhibit 10: Share of States in Total Tractor Sales (Oct - Sep, 08-09) KARNATAKA, 5.3 TAMIL NADU, 4.4 AP, 10.7 PUNJAB, 7.6 HARYANA, 7.5 RAJASTHAN, 8.4 CHATTISGARH, 2.7 MAHARASHTRA, 8.3 MP,8.0 GUJARAT,5.8 WEST BENGAL, 2.0 ORISSA, 1.9 N.E.STATES, 0.6 JHARKHAND, 1.4 BIHAR, 6.7 UP, 18.5 Farm Mechanization in India:AStatus Paper 16

27 V - International Trade in Farm Equipment 5 Since , India's trade in selected agriculture equipment has grown by more than 9.5 times. From about USD 63 Million in , India's agri-equipment trade presently stands at USD 603 Million 6 (refer exhibit11). In terms of value, exports occupy close to 70% share in share in the total trade of selected agricultural equipment. Indian exports have grown at a CAGR of 29.48% since , largely on account of tractors which account for four-fifth of the total Indian agriculture equipment exports and more so about one half of the total international trade in selected agriculture equipment. On the other hand, while import of agricultural equipment has grown at a CAGR of about 27% in value terms, its share in trade has declined from 35 percent at the beginning of the decade to 30% during However, as opposed to exports, which tilt towards tractors only, Indian imports are broad-based with a significant representation from cultivation, post harvest and dairy equipment. Tractors imports are minimal, standing at about 1.5% of the total import of selected agri-equipment during period April December Exhibit 11: Exports Imports of Selected Agricultural Equipment * Year Export of Selected Agri Equipment Import of Selected Agri Equipment USD Million, Actual Prices FICCI Research For the purpose of analysis in this section FICCI has considered selected agriculture equipment, notably, Agri / Horticultural Mechanical Sprayers, Ploughs, Disc Harrows, Agricultural and Horticultural Machinery and parts there-of, Seeders, Planters, Transplanters, Manure Spreaders & Fertilizer Distributors, and Mowers including Cultivators Bars for Tractor Mounting under cultivation equipment ; Straw / Fodder Bailers, Combine Harvesters & Threshers, other Harvesting & Threshing Machinery & parts there-of under Harvest category; Machines for Cleaning, Sorting/Grading Eggs, Fruit/ other Agricultural Produce, Seed, Grain Or Dried Leguminous Vegetables, other Machinery for Cleaning, Sorting / Grading and parts there-of, and machinery of preparation of fruits, nuts / vegetables under post harvest category; Tractors under HS Code 8701 covering Road tractors for semi trailers, Track laying tractors, and other Tractors; Poultry incubators and brooders and parts there-of, other Poultry-Keeping Machinery, and Machinery for preparation of Meat / Poultry under poultry section, Milking Machines & Dairy Machinery and parts there-of, and Machinery for preparing Animal Feeding Stuff; and other machinery like Lawn Mowers etc, Machinery and parts there-of for Manufacture of Wine, Cider, Fruit Juices etc, machinery for Sugar Manufacture, and Brewery machinery. The details of which have been given in Annexure no. I & II 6 The latest data pertains to period April to December of the fiscal Farm Mechanization in India :AStatus Paper

28 Export Analysis: From a meager exports of about USD Million in , exports of the selected agriculture equipment have grown by about 11 times to reach USD 417 Million in the first nine months of (Refer exhibit 12). However, a significant trend in exports is that the overall farm equipment export follows that path of tractor exports (Refer exhibit 13). USA is the major export destination followed by Brazil, Nepal, Sri Lanka, Australia, Turkey and Bangladesh Exhibit 12: Selected Agriculture Equipment Exports (Value at Actual Prices, USD Million) * FICCI Research Exhibit 13: Export Trends FICCI Research Export growth (%) Tractor Export Growth (%) Farm Mechanization in India:AStatus Paper 18

29 Tractor Exports: Export of Tractors witnessed a surge in , when an export growth of nearly 70% was recorded over the previous fiscal. From then on tractor exports have been growing in the about 30% per year (Refer exhibit 14). The export of tractors occupies about 80% of total exports of selected agriculture equipment (Refer exhibit15). Some of the major destinations of tractors include USA, Latin American countries like Brazil, Australia in Asia Pacific, Turkey among the European nations and Sri Lanka and Bangladesh in South Asia. Besides, independent research points that the share of high HP segment (>40 HP) tractors in exports has also been rising and this trend is expected to continue. Exhibit 14 : Tractors Equipment Exports [USD Million, Actual Prices] * FICCI Research Year Exhibit * FICCI Research Tractors Export Composition Other Agricultural Equipment Cultivation Equipment : Exports of cultivation equipment has registered a CAGR of about 19% over the last decade. Notable contributors to this growth include agricultural machinery parts, disc harrows and ploughs among others. (Refer exhibit 16). The major export destinations for these equipment include USA, Thailand, Ghana, Nigeria & Kenya. 19 Farm Mechanization in India :AStatus Paper

30 Exhibit 16 : Selected Cultivation Equipment Exports [USD Million, Actual Prices] * Year Harvesting Machines: Exports of harvesting machines like Combine harvesters threshers and parts thereof has been witnessing a continued surge with a CAGR of around 30% since (Refer exhibit 17). Some of major export destinations include Sri Lanka, Germany, USA, UK & Ghana. Exhibit 17 : Selected Harvesting & Threshing Equipment Exports [USD Million, Actual Prices] * Year Post Harvest equipment : Machinery and parts there-of for cleaning, sorting, or grading seed, grain or dried leguminous vegetables are the main equipment that are driving the growth of post harvest equipment. This segment is growing at a CAGR of around 11% since ; the major export destinations being Nigeria, Myanmar, Nepal, Ghana, and Sri Lanka. Farm Mechanization in India:AStatus Paper 20

31 Exhibit 18 : Selected Post-Harvest Equipment Exports [USD Million, Actual Prices] * FICCI Research Year Other Agricultural Equipment : Machinery and parts there-of for manufacture of wine, cider and fruit juices etc, machinery for sugar manufacture and brewery machinery are the prime constituents driving growth in this segment. Growing at a CAGR of 28%, these equipment have France, USA, Spain, and Korea as major export destinations. Exhibit 19 : Others Equipment Exports [USD Million, Actual Prices] * FICCI Research Year Poultry Equipment : Poultry keeping machinery and parts thereof are being exported to Nigeria, Mali, Bangladesh, Kenya, and USA. The exports under this segment have registered a CAGR of 9% since last decade (Refer exhibit 20). 21 Farm Mechanization in India :AStatus Paper

32 Exhibit 20 : Selected Poultry Equipment Exports [USD Million, Actual Prices] * FICCI Research Year Dairy Equipment : Dairy machinery and parts of milking and dairy machines are being exported to the countries of Uganda, Australia, Kenya, Saudi Arab, and Zambia (refer Exhibit 21). Exhibit 21 : Selected Dairy Equipment Exports [USD Million, Actual Prices] * FICCI Research Year 58.8% Export Composition over the Years 70.6% 79.7% 41.2% 29.4% * Tractors Other Equipment 20.3% Farm Mechanization in India:AStatus Paper 22

33 Imports Analysis: Import of agricultural equipment was staggered till the year Since then it has registered an increase at a CAGR of around 12% (in value terms) since the beginning of (Refer exhibit 22). During the first nine month of the fiscal 08-09, the imports have registered a surge of 11.67% over the previous period. Imports of agriculture equipment are broad-based with a significant representation from cultivation, post harvest and dairy equipment. At present post harvest equipment, is the largest segment, and accounts for as much as 42% of the total selected agriculture equipment imports. Apart from this, cultivation equipment especially, machineries for agricultural & horticultural purposes have been witnessing a continued surge over the years. The composition of Indian imports of selected equipment has been depicted in the following graphic Exhibit 22 : Selected Agriculture Equipment Imports (Value at Actual Prices, USD Million) * FICCI Research Import Composition over the Years 6.1% 7.1% 29.5% 6.1% 19% 4.4% 48.6% 27.9% 22% 1.5% 42.2% 34.3% * Tractors Cultivation Equipment Post Harvest Equipment Other Equipment 23 Farm Mechanization in India :AStatus Paper

34 Cultivation Equipment : Import of cultivation equipment, has been registering an impressive increase, notably in the case of machinery & parts there-of for agricultural and horticultural purposes. The imports have been growing at a CAGR of 15% since , when the exports picked up. Major source countries include China, Italy, Germany, USA, and Australia (refer exhibit 23). Exhibit 23 : Selected Cultivation Equipment Imports [USD Million, Actual Prices] * FICCI Research Year Harvesting Machines: Predominant imports in this category include parts of harvesting and threshing machines etc., Japan, Italy, China, New Zealand, and USA are the major countries under this category; harvesting machines over the years have grown at CAGR of 9% (refer exhibit 24) Exhibit 24 : Selected Harvesting & Threshing Equipment Imports [USD Million, Actual Prices] * FICCI Research Year Farm Mechanization in India:AStatus Paper 24

35 Post Harvest Equipment : Machines and parts there-of for cleaning, sorting, or grading seed, grain or dried leguminous vegetables, fruits, nuts and seeds etc are the main equipment imported in this category. Growing at a CAGR of around 32%, these machineries are being sourced from the countries of Japan, UK, Thailand, China, and Austria (refer exhibit 25). Exhibit 25 : Selected Post-Harvest Equipment Imports [USD Million, Actual Prices] * FICCI Research Year Other Agricultural Equipment : Brewery machinery is the predominant equipment imported in this category. These equipment are being imported from Italy, Korea, France, Japan, and USA. A CAGR of 12% has been registered under this section (refer exhibit 26). Exhibit 26 : Others Equipment Imports [USD Million, Actual Prices] * FICCI Research Year 25 Farm Mechanization in India :AStatus Paper

36 Dairy Equipment : Dairy machinery from Japan, UK, Germany, Denmark, and Sweden. A CAGR of 17% has been registered under this section since (refer exhibit 27). Exhibit 27 : Selected Dairy Equipment Imports [USD Million, Actual Prices] * FICCI Research Year Poultry Equipment : Poultry incubators, brooders & machinery for preparation of meat etc are predominant imports in this section. These are imported from Belgium, Netherlands, Germany, USA, and China. Exhibit 28 : Selected Poultry Equipment Imports [USD Million, Actual Prices] * FICCI Research Year Farm Mechanization in India:AStatus Paper 26

37 VI - Policy Scenario in the Country There is no separate National Policy on Agricultural Mechanization. However, Agricultural mechanization strategy for the nation is covered under the National Agriculture Policy and has the following objectives: To achieve sustainable increase in yields and cropping intensity so as to meet planned growth rate in Agriculture To ensure a satisfactory rise in the incomes of agricultural workers; and thereby reduce urban & rural income disparity To target flow of farm mechanization benefits to all types of farmers including small and marginal ones in different regions of the country, particularly rain fed areas To create a worker friendly environment especially for women by reducing hard labour, health hazards and improve safety in production operations To reduce cost of production Governmental programmes related to agricultural mechanization lay emphasis on selective mechanization with the aim of optimal utilization of the available sources of farm power. Various promotional schemes have been undertaken for (1) replacement of traditional and inefficient implements and hand tools by improved ones; (2) enable the farmers to own tractors, power tillers, power driven equipment, improved bullock drawn equipment/hand tools etc through subsidy and their popularization through demonstrations. Two main agriculture mechanisation programmes are: The Ministry of Agriculture, Government of India is implementing a Central Sector Scheme Promotion & Strengthening of Agricultural Mechanization through Training, Testing & Demonstration with a Tentative Budget Outlay of Rs crore during XI Plan. The main components of this scheme are Training, Testing, Demonstration and Outsourcing of Training; Central Sector Scheme Post Harvest Technology & Management being implemented from March, 2008 with the main objectives of (1) Establishment of units for transfer of primary processing technology, value addition, low cost scientific storage, packaging units and technologies for bi-product management in the production 27 Farm Mechanization in India :AStatus Paper

38 catchments under tripartite agreement; (2) Establishment of low cost Post Harvest Technology (PHT) units/supply of PHT equipment with Government assistance; (3) Demonstration of technologies; and (4) Training of farmers, entrepreneurs and scientists. The scheme will continue during XI Plan with an allocation of Rs crore; Besides the above, promotion of agriculture mechanisation is also a focus of the following schemes: Macro Management of Agriculture Scheme was formulated in by bringing together under one umbrella 27 centrally sponsored schemes relating to cooperatives, crop production programmes, watershed development programme, horticulture, fertilizer, mechanization and seeds. For the fiscal an allocation of Rs crore has been provided for the scheme; and Rashtriya Krishi Vikas Yojana (RKVY): launched in , RKVY is a new State Plan Scheme of Additional Central Assistance (ACA) for agriculture and allied sectors. The scheme has envisaged outlay of Rs crores for the XI plan. The scheme has evoked a good response from the states, which have earmarked about 4% of the total outlay for farm mechanisation. Funds to the tune of Rs crore and Rs crore were made available in RKVY during and Recommendations to Strengthen the Sector: While there is immense scope for improvement in mechanization of agriculture, a concerted push is needed to facilitate penetration of improved technology in this segment. Some key interventions needed by the public sector include: Government support for joint projects with Agricultural Universities for development of customized technologies suitable to Indian conditions and promotion of advanced farm machinery. Policy support to tractor manufacturers to enter into joint ventures with regional implement and attachment manufacturers for design, development, up gradation and their validation. Provision of special Credit support at lower interest rates to rural individuals, venturing into entrepreneurial use of Farm Machinery through custom hiring. Farm Mechanization in India:AStatus Paper 28

39 Provision of incentives and policy support for the development and promotion of farm mechanization technologies suitable for Dry Land Farming, Horticulture & Orchards. Provision of incentives to support the development of mechanization technologies which helps to conserve resources such as water, soil fertility etc. Excise and VAT Exemption: In view of the labor shortage evident in the agriculture season due to MGREGA, and other social welfare and employment schemes, there is a need to move towards increased mechanization. Provision of excise duty and VAT exemption for agricultural machinery and equipment purchased by farmers' cooperatives, village level panchayats and agribusiness / clinic entrepreneurs would reduce the cost of such implements auguring their acceptance among the farming community. It is recommended that VAT and excise duty be exempted for the following agriculture machinery and equipment: Rotavator Root Crop Harvester Zero Till Drill Pneumatic Planter Rota Till Drill Multi Grain Harvester Multi Crop Planter Transplanters and Planting equipment Aero blast Sprayer Sugarcane Harvesters Power Weeder Sugarcane Planters Reaper Cotton Pickers Multi Crop Thresher Hay and Forage Management equipment Farm Service Centers: It is widely believed that custom hiring (also known as the taxi model) is best suited model for accelerating farm mechanization in India. While custom hiring is prevalent in India for some of the agriculture machinery, it is highly unorganized and sporadic. Severe labour shortages in crops such as sugarcane necessitates for the use of machines such as sugarcane harvesters and planters. How ever, the cost of these equipment makes them unviable even for large farmers in India. Most of these equipment would cost between 25 lakhs to 50 lakhs per unit. Further, they need a minimum number of 1200 to 1800 operating hours anually to be financially viable. One of the possible solutions to this issue is to promote the concept of organized 29 Farm Mechanization in India :AStatus Paper

40 custom hiring through farm service centers. Farm services centers could be owned by entrepreneurs who undergo Agri-Business Clinic programme in MANAGE and could cater to villages in the vicinity of the center. To make these centers viable, the following fiscal and tax incentives need to be considered: o o o 50% capital subsidy on specific machinery and equipment depending upon the crops grown in the agro-climate zone, where the farm service center is located Excise duty and VAT exemption for the machinery purchased for farm service center Extending the tax benefits given under Investment linked tax incentives proposed in the last union budget As most of these agriculture graduates who undergo training in the Agri- Clinics Programme of MANAGE would not have enough collateral to take loan that might be as high as 1.0 crore, the companies that are selling the equipment need to consider provision of collateral to ensure that these graduates can avail loan to buy high cost equipment. A new framework of this kind to make custom hiring more organized in the country would provide a major impetus to the acceleration of farm mechanization in the country, especially, to the segment of high-end and large agriculture machines. Special Schemes: Special schemes suggested to promote farm mechanization are discussed herewith. o o o Manufacturing units that are set-up in areas with lower mechanization need to be supported by extending tax and duty sops. This would result in easier reach of the equipment to farmers in those areas. Simultaneously the government needs to also design easier financing schemes to such farmers. A higher rate of refinance needs to be extended to loans lent by banks in regions with low mechanization so as to increase the interest of banks to lend to this sector. Banks need to develop hassle free loan procedures. To facilitate this process the government could offer to develop a loan origination and disbursement process. Farm Mechanization in India:AStatus Paper 30

41 References 1. Department of Agriculture & Co-operation, Ministry of Agriculture, Government of India, Background Note for Economic Editors Conference ; November Export Import Data bank, Ministry of Commerce, Government of India, last accessed on November 23, Jain, Ramesh C., The Tractor Industry in India Present and Future, Roundtable Forum for Regional Agricultural Machinery Manufacturers / Distributors Associations; Kulkarni, Dr S. D., Mechanization Of Agriculture - Indian Scenario, 5th APCAEM TC Meeting & Expert Group Meeting on Application of Agricultural Machinery for Sustainable Agriculture; October Palathitta, Rejie George et al, TAFE in the Tractor Industry: Strategic Insights, tejas@iimb, last accessed on November 23, Pandey, M.M., Present Status and Future Requirement of Farm Equipment for Crop Production Status of Farm Mechanisation in India, Indian Agriculture Statistics Research Institute; March Pandey, M.M., Indian Agriculture An Introduction, IV Session of the Technical Committee of APCAEM; February Singh, Gyanendra, Agricultural Machinery Industry in India (Manufacturing, marketing and mechanization promotion), Status of Farm Mechanisation in India, Indian Agriculture Statistics Research Institute; March Singh, Joginder, Scope, Progress and Constraints of Farm Mechanization in India Status of Farm Mechanisation in India, Indian Agriculture Statistics Research Institute; March Srivastava, N.S.L., Farm Power Sources, their Availability and Future Requirements to Sustain Agricultural Production, Status of Farm Mechanisation in India, Indian Agriculture Statistics Research Institute; March Zinnov Consulting, Agriculture Equipment Market in India Overview ; November 2006 An 31 Farm Mechanization in India :AStatus Paper

42 Annexure I Export data pertaining to selected commodities (USD Million) Sl No HS Code Particulars (Apr-Dec) AGRI / HORTICULTURAL MECHANICAL SPRAYERS OTHER AGRICULTURAL AND HORTICULTURAL MACHINERY AGRICULTURAL & HORTICULTURAL MACHINERY PARTS PARTS OF OTHR AGRICULTUTAL, HORTICULTURAL & FORESTRY MACHINE INCL GERMINATION OF PLANT PLOUGH DISC HARROWS OTHER [Harrows, Cultivators, Weeders, etc] SEEDERS, PLANTERS & TRANSPLANTERS MANURE SPREADERS & FERTILISER DISTRIBUTORS LAWN MOWERS ETC OTHER MOWERS OTHER MOWERS INCLUDING CULTIVATOR BARS FOR TRACTOR MOUNTING STRAW/FODDER BALERS COMBINE HARVESTER THRESHERS OTHER THRESHING MACHINERY OTHER HARVESTING & THRESHING MACHINERY PARTS OF HARVESTING, THRESHING MACHINES ETC MCHNS FOR CLEANING, SORTING/GRADING EGGS, FRUIT/OTHR AGRICULTURAL PRODUCE MILKING MACHINES DAIRY MACHINERY Farm Mechanization in India:AStatus Paper 32

43 Sl No HS Code Particulars (Apr-Dec) PARTS OF MILKING & DAIRY MACHINES MACHINERY USED IN MANUFACTURE OF WINE, CIDER, FRUIT JUICES ETC PARTS OF MACHINERY USED IN MANUFACTURE OF WINE, CIDER, FRUIT JUICES ETC MCHNRY FR PRPRNG ANML FEEDNG STUFFS POULTRY INCUBATORS AND BROODERS OTHR POULTRY KEEPING MACHINERY OTHER MACHINERY OF HD PARTS OF POULTRY KEEPING MACHINERY/ POULTRYINCUBATORS & BROODERS MACHINES FOR CLEANING, SORTING OR GRADING SEED, GRAIN OR DRIED LEGUMINOUS VEGETABLES OTHER MACHNRY FOR CLNG, SRTNG/GRADNG SEEDS PARTS OF MACHNS FR CLNG, SRTNG GRADNG ETC MCHNRY FOR SUGAR MANUFACTURE BREWERY MACHINERY MCHNRY FOR PRPRTN OF MEAT/POULTRY MCHNRY FR PRPRTN OF FRUITS,NUTS/VGTBLS ROAD TRACTORS FOR SEMI-TRAILERS TRACK-LAYING TRACTORS OTHER TRACTORS Farm Mechanization in India :AStatus Paper

44 Annexure II Import data pertaining to selected commodities (USD Million) Sl No HS Code Particulars (Apr-Dec) AGRI / HORTICULTURAL MECHANICAL SPRAYERS SNOW-PLOUGHS AND SNOW-BLOWERS OTHER AGRICULTURAL AND HORTICULTURAL MACHINERY AGRICULTURAL & HORTICULTURAL MACHINERY PARTS PLOUGH OTHER [Harrows, Cultivators, Weeders, etc] SEEDERS,PLANTERS & TRANSPLANTERS MANURE SPREADERS & FERTILISER DISTRIBUTORS LAWN MOWERS ETC OTHER MOWERS OTHER MOWERS INCLUDING CULTIVATOR BARS FOR TRACTOR MOUNTING OTHER HAYMAKING MACHINERY STRAW/FODDER BALERS COMBINE HARVESTER THRESHERS OTHER THRESHING MACHINERY ROOT OR TUBER 0.12 HARVESTING MACHINES OTHER HARVESTING & THRESHING MACHINERY PARTS OF HARVESTING, THRESHING MACHINES ETC MCHNS FOR CLEANING, SORTING/GRADING EGGS, FRUIT/OTHR AGRICULTURAL PRODUCE MILKING MACHINES DAIRY MACHINERY Farm Mechanization in India:AStatus Paper 34

45 Sl No HS Code Particulars (Apr-Dec) PARTS OF MILKING & DAIRY MACHINES MACHINERY USED IN MANUFACTURE OF WINE, CIDER,FRUIT JUICES ETC PARTS OF MACHINERY USED IN MANUFACTURE OF WINE, CIDER, FRUIT JUICES ETC MCHNRY FR PRPRNG ANML FEEDNG STUFFS POULTRY INCUBATORS AND BROODERS OTHR POULTRY-KEEPING MACHINERY OTHER MACHINERY OF HD PARTS OF POULTRY KEEPING MACHINERY/ POULTRYINCUBATORS & BROODERS PARTS OF OTHR AGRICULTUTAL, HORTICULTURAL & FORESTRY MACHINE INCL GERMINATION OF PLANT MACHINES FOR CLEANING, SORTING OR GRADING SEED,GRAIN OR DRIED LEGUMINOUS VEGETABLES OTHER MACHNRY FOR CLNG,SRTNG/GRADNG SEEDS PARTS OF MACHNS FR CLNG,SRTNG GRADNG ETC MCHNRY FOR SUGAR MANUFACTURE BREWERY MACHINERY MCHNRY FOR PRPRTN OF MEAT/POULTRY MCHNRY FR PRPRTN OF FRUITS, NUTS/VGTBLS PEDESTRIAN CONTROLLED TRACTORS ROAD TRACTORS FOR SEMI-TRAILERS TRACK-LAYING TRACTORS OTHER TRACTORS Source: Export Import Data Bank, Ministry of Commerce, Government of India, last accessed on November 23, Farm Mechanization in India :AStatus Paper

46 About Agriculture Desk, FICCI Agriculture desk at FICCI has been strenuously working on agriculture policies. Over the years, considerable efforts have been put into devising policies & suggestions that would increase farm income, productivity and global competitiveness of Indian Agriculture. Under the leadership of Mr P M Sinha, Former President, Pepsi Cola International for South Asia, FICCI has played a pivotal role in defining the agri-policy framework of the nation. Through its long standing collaboration with the Ministry of Agriculture, Government of India, the Agriculture desk has assiduously worked to promote public-private partnership in agriculture, agriculture R&D, agriculture extension, horticulture, risk management, energy security specifically in reference to first and second generation bio-fuels, and agri-marketing reforms. In partnership with the Ministry of Agriculture, Government of India, FICCI organizes the Agriculture Summit, a flagship policy forum to debate and evolve a policy roadmap for agriculture and allied sector development in India. The key objectives of the FICCI Agriculture desk are to: Identify major bottlenecks that hinder the growth of Indian agriculture; Sensitize all stakeholders including the Central and the State Governments to catalyze the necessary policy changes that are needed to make this sector more vibrant and competitive; Address the conflicting domestic policies relating to production, procurement, pricing and distribution, rising Minimum Support Prices, ineffective subsidy system, regulated domestic markets, lack of infrastructure facilities, low productivity, low value addition, ad hoc export policies; Define measures to attain a higher trajectory growth in agriculture (of more than 4 per cent) in order to compete in the global market; and The Agriculture desk in FICCI has also been instrumental in forging international co-operation for showcasing / broad basing new technologies / possible collaborative opportunities for the benefit of all the stakeholders in agri value chain. It has anchored some initiatives

47 successfully in the fields of marketing of fresh & value added agriproducts, Integrated Pest Management, Drip Irrigation with Israel and Development of Terminal Markets with United States of America. FICCI is also collaborating with Italy on the Farm Mechanisation front. Our future endeavors include development of an effective framework for implementation of Negotiable Warehouse Receipts system and development of an effective risk management mechanism for agriculture along with United States Department of Agriculture [USDA] Publications: Policy Papers Indian Agriculture The Winds of Change [2006] Indo-Israel Agribusiness Opportunities [2006] Emerging Platforms for Agriculture Marketing [2007] A Roadmap for Agricul ture Marketing Reforms [2008] A New Framework for Agriculture Extension in India [2009] Queries to FICCI may be directed to: Dr S Baskar Reddy Head Agriculture, Water & Rural Development Occasional Papers Status of Farm Mechanisation in India [2008] Ensuring Energy Security through Bio-fuels [2009] Investment & Reforms in Agriculture Research & Development [2009] Federation of Indian Chambers of Commerce and Industry [ FICCI] Federation House Tansen Marg New Delhi Ph: , (Extn 488 & 407) Fax: baskar@ficci.com

48 About YES BANK YES BANK, India s new age private sector Bank, is an outcome of the professional entrepreneurship of its Founder, Rana Kapoor and his highly competent top management team, to establish a high quality, customer centric, service driven, private Indian Bank catering to the Emerging India. The Bank has adopted international best practices, the highest standards of service quality and operational excellence and offers comprehensive banking and financial solutions to all its valued customers. A key strength and differentiating feature of YES BANK is its knowledge driven approach, which goes beyond the traditional realm of banking, and helps adoption of a diagnostic and prescriptive approach towards superior product structuring. YES BANK lays significant focus to supporting the sustainable growth and development of the emerging sectors of the Indian economy to facilitate overall development. To actualize YES BANK s focus and commitment for the holistic development of the Food and Agribusiness sector, a specialized Food & Agribusiness Strategic Advisory and Research (FASAR) division has been domiciled within the Development and Knowledge Banking group at YES BANK. In its endeavour to catalyse the transformation of this highly important sector, which is the backbone of the Indian economy, YES BANK has committed to the cause of bridging the infrastructure and Knowledge gaps, that still exist in the agribusiness sector. YES BANK is steadily building corporate and institutional banking, financial markets, investment banking, corporate finance, business (SME) and transaction banking, retail banking and wealth management business lines across the country. The Bank s constant endeavour is to provide a delightful banking experience expressed with simplicity, empathy and totality. Queries to YES BANK may be directed to: Ajay Kakra Head North India Food & Agribusiness Strategic Advisory and Research (FASAR) YES BANK Limited 7th floor, Tower B, Building no. 8, DLF Cyber City, Phase-II, Gurgaon Ph: , Fax: ajay.kakra@yesbank.in

49 Organisers Co-organisers Thank you Sponsors Event Sponsor Knowledge Partner Supported by

50

51