Economics & Politics / Rural India / Tractor Industry

Farm Mechanization in India

Farm Mechanization in India

(excerpt from the State of Indian Agriculture : 2012 Report)

Farm Machinery and Equipment

Farm mechanization saves time and labor, cuts down crop production costs in the long run, reduces post-harvest losses and boosts crop output and farm income. Empirical evidence confirms that there is a strong correlation between farm mechanization and agricultural productivity. States with a greater availability of farm power show higher productivity as compared to others.

  • Level of Mechanization of Different Operations in Indian Agriculture


Current Mechanization Level

Soil working & Seed Bed preparation


Seeding & Planing


Plant Protection




Harvesting & Threshing

For Wheat & Rice – 60-70%
For Other Crops – Less than 5%

Source: Singh et al

Farm Mechanization improves Efficiency & Productivity

Currently increasing the threat to natural resources, notably land and water, has further necessitated a switching over to machine assisted resource-conservation techniques such as zero-tillage, raised-bed planting, precision farming, drip or sprinkler irrigation, etc. Farm mechanization has now become more relevant in mitigating the effect of climate change by readjusting crop sowing schedules. For example, the climate change-driven early onset of summers in the northern states has often resulted in wheat yield dropping by 1.5 quintal per hectare with every one week’s delay in its planting after mid-November.

This loss can be averted by sowing wheat early, which is possible only if the previous paddy crop is harvested mechanically and wheat is planted with zero-till seed drills that do not require ploughing the land. A greater degree of farm mechanization can also address the issues of scarcity of farm labor during peak agricultural seasons of sowing and harvesting with the implementation of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

More recently, the financial reforms in the 1990s, easy availability of institutional financing and capital subsidy especially on tractors initially propelled growth in farm mechanization. However, since 2007-08, there has been a slowdown, which many believe is due to financial institutions becoming cautious and adopting more stringent lending norms.

The reason for increasing defaults on such loans, among others, is the ‘unviable’ nature of individual ownership of ‘high value agriculture equipment’ like tractors, power tillers, etc. Structural issues like high procurement cost, adverse economies of scale, lower credit worthiness, etc. have resulted in an automatic ‘exclusion’ of the majority of small and marginal farmers in India from the benefit of farm mechanization. As a result, farm mechanization has developed a stronger bias towards larger land holdings (NSSO 2005).

India – Largest manufacturer of Tractors in the world

Presently, India is the largest manufacturer of tractors in the world, accounting for about 1/3rd of the global production.

Power tillers are becoming popular in lowland flooded rice fields and hilly terrains. Steady growth was observed in manually operated tools, animal operated implements, and equipments operated by mechanical and electrical power sources. In manually operated equipment, the number of sprayers has almost doubled since 1992. After liberalization and with development of prototypes of machines, manufacturing got a big boost particularly in Haryana, Punjab, Rajasthan, Madhya Pradesh and Uttar Pradesh.

About 700-800 combines are sold annually in India. Tractor operated combine harvester, costing only 25-30% of the self propelled combine, has been a good innovation by manufacturers of Punjab; and this machine can be owned individually by farmers. The self-propelled combines are largely owned by custom-hiring contractors. Standardization and quality of implement manufacturing is ensured mainly by BIS and over 500 standards on agricultural machinery are prescribed.

Since the early 70’s, the composition of the relative share of different sources of power for farming operations has undergone significant change as can be seen from Table 3.6. According to a study (Singh et al.), the share of agricultural workers and draught animals have come down from 63.5 percent in 1971-72 to 13.67% in 2009-10 whereas that of tractors, power tillers and diesel engines and electric motors has gone up from 36.51% to 86.33% during the same period.


  • Percentage share of different Farm Power sources in Indian Agriculture


Agriculture Workers

Draught Animals


Power Tillers

Diesel Engines

Electric Motors

Power kW/ha

















































Source: Singh et al

The Department of Agriculture and Cooperation, Ministry of Agriculture, has been providing financial assistance on agricultural equipment and implements to all categories of farmers under its various Central Sector Schemes.

This has been instrumental in bringing level of farm power from 1.35 Kw per ha from beginning of Tenth Five year plan to 1.66 Kw per ha by the end of 2009-2010.

Simultaneously, the farm equipment industry has also witnessed robust sales growth in Tractors and Power tillers.

  • Sales of Tractors & Power Tillers in India



Tractor Sales (Nos.)

Power Tiller Sales (Nos.)

2004-05           247,531             17,481
2005-06           296,080             22,303
2006-07           352,835             24,791
2007-08           346,501             26,135
2008-09           342,836             35,294
2009-10           393,836             38,794
2010-11           545,109             55,000
2011-12 (Till Dec’11)           419,270             39,900

Source: Department of Agriculture & Cooperation

Concerted efforts of state and central government have seen greater adoption of mechanization in land preparation or tilling, harvesting and rice transplantation.

Some of the agricultural equipments/ farm machinery are gradually becoming popular.

  • Gender Friendly Reaper-cum-Binder

  • Combine Harvester

  • Tractor operated Seed-cum-Fertilizer Drill

  • Gender Friendly Rice Transplanter

  • Laser Land Leveller

Challenges toward mechanizing the Indian Farms

  • Farm Mechanization in India is still in its early stages.
  • Despite growing Farm mechanization, India was able to achieve a meager growth rate of less than 5% in last two decades.
  • The average farm power availability in the country is still at a low level compared to other countries like China, Korea and Japan.
  • Farm mechanization has become a dire necessity in view of significant reduction in supply of labor for agricultural operations in recent years.
  • Mechanizing small & non-contiguous group of lands is against ‘economies of scale’ especially in operations like land preparation and harvesting.
  • With continued shrinkage in average farm size, more  farms will fall into the adverse category thereby making individual ownership of agricultural machinery progressively more uneconomical.
  • Farm mechanization is capital intensive & thus it remains beyond the reach of small & marginal farmers.
  • Custom Hiring Centres
    • Custom Hiring Centres could have been an alternate option. But, these centres need a minimum scale for efficient operation as the activity is capital intensive.
    • They also have a longer gestation period due to lower asset utilization on account of the seasonal nature of agriculture demand.
    • Higher risk due to ‘uncertain demand’ and ‘immature market’ has barred seasoned business entities from entering this segment.
    • First generation entrepreneurs willing to establish these centres face a significant ‘entry barrier’ on account of non-availability of financing either in the form of venture capital or institutional loans.
    • With the level of Non- Performing Assets (NPAs) continuing to remain significant, it is unlikely that the risk perception of financial institutions will change in the near future.
    • Non-availability of the much needed technical and institutional support and after sales has further prevented this segment from developing and maturing.
    • Small or first generation entrepreneurs even if they are enterprising enough to establish custom hiring centres, do not usually qualify for bank loans for want of collaterals or credit guarantees. As a result, there is virtually a ‘complete market failure’ in this segment. Intensive research on farm mechanization is also not adequate as it is a very capital intensive activity.


Farm Mechanization – The Way forward

Recognizing the need to spread the benefits of farm mechanization among all strata of farmers especially small and marginal farmers, the Department of Agriculture & Cooperation (DAC) proposes to formulate one integrated National Mission on Agricultural Mechanization (NMAM).


  • National Mission on Agricultural Mechanization (NMAM)

NMAM will put ‘Small & Marginal Farmers’ at the core of the interventions with a special emphasis on ‘reaching the unreached’, i.e. bringing farm mechanization to those villages where the technologies deployed are decades old. Besides, the Mission also proposes to cater to ‘adverse economies of scale’ by promoting ‘Custom Hiring Services’ through ‘the rural entrepreneurship’ model.

The Mission will aim at catalyzing an accelerated but inclusive growth of agricultural mechanization in India by way of the following:

  • Increasing the reach of farm mechanization to small & marginal farmers &  to the regions where availability of farm power is lower;
  • Offsetting adverse ‘economies of scale’ & ‘higher cost of ownership’ of high value farm equipments by promoting ‘Custom Hiring Centres’ for agricultural machinery;
  • Passing on the benefit of hi-tech, high value & hi-productive agricultural machinery to farmers through creation of hubs for such farm equipment;
  • Promoting farm mechanization by creating awareness among stakeholders through demonstration and capacity building activities;
  • Ensuring quality control of newly-developed agricultural machinery through performance evaluation & certification at designated testing centres located all over the country.

The following components are envisaged in the Mission for accelerated and inclusive growth of farm mechanization in India:

  • Promotion & strengthening of agricultural mechanization through training, testing & demonstration;
  • Post Harvest Technology & Management (PHTM);
  • Financial Assistance or Procurement Subsidy for Agriculture Machinery & Equipment;
  • Establishment of Farm Machinery Banks for Custom Hiring;
  • Establishing a Hi-Tech, High Productive Equipment Hub for Custom Hiring;
  • Enhancing Farm Productivity at the village level by introducing appropriate farm mechanization
  • Creating ownership of appropriate farm equipment among small & marginal farmers in the eastern/north eastern region

Source : State of Indian Agriculture 2011-12


5 thoughts on “Farm Mechanization in India

  1. Pingback: Sommerview Farms Low Boarding Costs, Poorly Managed « wordsthatihavefound

  2. Pingback: Indian Agriculture and Tractor industry Update: April 2012 « For Whatever It's Worth…

  3. Pingback: India’s Mission Agriculture : Proposed NMAM Project in XII Five Year Plan « For Whatever It's Worth…

  4. Interesting blog with great stuff. But it’s difficult for a farmer to invest huge amount in farm equipment’s, as their many natural calamities taking place effecting the crops and in turn their finances.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s