The Tractor Industry
Domestic Scenario
India contributes nearly 30% of global tractor production (largest in the world).

Agriculture still accounts for 25% of country’s GDP and engages 60% of the population in employment. Average CAGR of tractor industry has been 8% over the last 3 decades. Tractor population is concentrated in just 10% of our villages. Even today 70% of villages do not have a tractor. There is large untapped potential – it is a growth industry for at least next 15 years.

Size of Indian Tractor Industry

Global tractor industry

The global spotlight on Tractor manufacture certainly in terms of unit volume seems to be swinging away from the USA, UK and Western and Eastern Europe towards India and China where growth in the number of producers and the total volume in recent years have been impressive.

Industry trends and outlook
Global Construction Equipment Industry - 2005

India is likely to move up the list of top ten markets for construction equipment. It is expected to take the seventh place in the next five years by overtaking Spain, Italy and Canada.
Presently, the global construction and road equipment industry is valued at $49 billion and is dominated by developed countries that constituting 70 per cent. Emerging markets are China and India, with overall strong growth in south Asia and south east Asian countries.

The construction equipment business is a cyclical industry and it has seen three recessions in the last three decades.

Industry expected to grow @ approx. 20% for the coming years. 2-3 Ton diesel volumes set to cross 2000 units during the current year. While auto components, mining, logistics and process industry are the main drivers, government and defence are also buying in bulk. Reliance Retail to open up big market for warehousing equipment. Other renowned logistics companies are spreading base. Another potential market is the SEZs which is slated to grow from the present 11 nos. to over 100.

Railway Equipment

Indian Railways, having one of the largest rail networks of the world, is in the process of major technological up-gradations. The Plan outlay for 2006-07 for Railways at Rs. 23,475 cr. is the largest ever plan and is 32% higher than the plan outlay for the last year, excluding outlay provided for national projects. Wagon manufacture has been planned to increase by about 25%. As a measure for import substitution of expensive technology related products, most of its rolling stock and heavy engineering components are manufactured by Indian Railways. It also procures several components from domestic manufacturers who have strict and proven standards of design, development, testing and validation.


Auto Component

The Indian auto component industry of nearly US$ 10 billion is witnessing a tremendous growth and is expected to touch US$ 40 billion by the year 2014 at a CAGR of 17%. Exports, which today stand at nearly US$ 2 billion are expected to grow at a CAGR of 34% and reach US$ 25 billion by the year 2014. On the domestic scenario, growth in new vehicles is being driven mainly because of a boom in the size of both urban and rural middle class with more disposable income, easy financing and affordable interest rates. This in turn has propelled the demand for auto components for OEMs. There has also been a fast growing replacement market for auto components, which is expected to be a major driver in the coming years. Simultaneously, multinational OEMs and Tier 1 manufacturers are increasingly viewing India as their sourcing base. (Source: ACMA McKinsey Report)