Substantial Growth For Tractor Industry 19/08/2006

A substantial growth of 35% has become evident for the Indian tractor industry in the first quarter of the current fiscal, due to an ongoing government run infrastructure project. 80,000 units were gained in the first quarter as opposed to 67,000 units that were clocked in the previous year. The investment plan of Rs 1,80,000 core against Rs 1,43,000 of last year is helping the industry which is the priority sector.

'One of the differences however, is on the exports front. While there has been an exponential growth in exports in the corresponding period of the last fiscal, this year, there has been a decline,' said RC Jain, president, Tractor Manufacturers Association (TMA).

'If you analyse the reason, our exports are driven by manufacturers rather than by the market. John Deere, which was leading the pack among the exporters, drove very large growth in exports in the last two years. The exports from the company in the first quarters, has slipped,' said Jain.

Figures for exports decreased from 1176 units in 2005 – 06 to 885 units in 2006-07, which means exports are down by 24.7 percent. Most companies have not had the same results as those above, they have been more successful in terms of exports, apart from John Deere. The market leader M&M has reported an 80% growth over the corresponding period in June last year.

Escort however, has reported a 42 percent growth over the last year. New Holland also had a growth of 31% in exports in the first six months of the current calendar year. Sonalika and HMT Tractors are some of the companies that had a fall in sales.

With regard to the state-wise performance of the sector, Jain said, 'The industry in most of the states has witnessed a double-double digit growth in the first quarter. While Andhra Pradesh tops the chart with a 100 percent growth, Gujarat and Maharashtra rank second with more than 60 percent growth. Even Tamil Nadu and Karnataka have shown impressive performance with 50 and 30 percent growth respectively.

The Northern states have performed better this year than last. However its Southern and Western counterparts have been more successful. Haryana is ranked highest on the list with 55 per cent growth followed UP and Punjab at 32 and 21 per cent. The Western and Southern regions have beneficial financial facilities. Due to this positive results have taken affect from irrigation and infrastructure projects.

A positive contribute has been made from interest from younger people who are buying from this sector. Tractors are brought for multi tasking rather than for just one project.

Commenting on industry's growth trend, Jain said, 'If you look at 1999-2000, when the industry was at a peak with 2, 67,000 tractors, it had gone down to 1,72,000 tractors in 2002-03. This came down further by 5 percent, next year by 13 percent and the year after, by 23 percent. From 2003 onwards industry started looking up again and grew slowly and steadily by 11 percent in 2003-04, 31 percent in 2004-05 and then 17 per cent.

Last year, the tractor sector ended the year at 2, 91,000 against 2,50,000 of the previous year. With that kind of a backdrop, this year's domestic growth of 35 percent and overall growth of 30 percent, in the first quarter is not bad by any standards,’ said Jain.

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