Market Trends of India Agricultural Tractor Industry
30-50 HP Tractors Are Widely Preferred by Farmers
Tractors in the 30-50 HP range are well-suited for soft soil conditions, such as river basins, and are in high demand in India. This demand is driven by farmers' low disposable income, high labor costs, and small farmland sizes. These moderate-horsepower tractors offer advantages such as customization options and lower fuel consumption, making them accessible to small and marginal farmers.
The trend towards smaller farm holdings further supports the demand for 30-50 HP tractors. According to the All India Rural Financial Inclusion Survey (NAFIS) 2021-22, the average landholding for farming in India decreased to 0.74 hectares, a 31% reduction from the previous survey. These tractors are efficient for small farm holdings and are crucial for increasing productivity, making them the most commonly used in India. This trend is expected to drive market growth during the forecast period.
Market players are responding to this growing demand by introducing new models in the 30-50 HP segment. For example, in September 2023, Swaraj launched a new range of tractors in the 40-50 horsepower category. Similarly, in May 2024, VST Tillers introduced three new tractors (VST ZETOR 4211, 4511, and 5011) with horsepower ranging from 41-50. These models are the result of joint development efforts between VST and ZETOR, manufactured at the VST Zetor facility in India.
Uttar Pradesh Provides the Biggest Market for Agricultural Tractors
Agriculture forms the backbone of Uttar Pradesh's economy, contributing 24% to the state's GDP in 2023, according to the Ministry of Statistics and Program Implementation (PRS). As the primary source of livelihood for a substantial portion of the state's population, the extensive agricultural activities drive the demand for agricultural machinery, particularly tractors. The Department of Agriculture and Farmers Welfare reports that Uttar Pradesh had the largest area under food grains production in 2021-2022, covering 19.55 million hectares, representing 15% of the country's total. Farmers utilize tractors for essential farming operations including plowing, tilling, sowing, harrowing, and harvesting, which enhances agricultural efficiency and productivity in the state.
The increasing fragmentation of land holdings in Uttar Pradesh has resulted in smaller land parcels, making traditional manual farming methods impractical. Tractors provide an efficient solution for small-scale farmers to manage their agricultural operations, positioning Uttar Pradesh as the leading state in tractor sales across India. In 2024, Escorts Kubota announced an investment of INR 45 billion (USD 531.4 million) to establish a greenfield manufacturing facility in Uttar Pradesh. This reflects the growth of the market.
