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Tractor Industry in India • Technical Experts from Collaborators and Training of Indian Counterparts

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Tractor Industry in India • Technical Experts from Collaborators and Training of Indian Counterparts Tractor industry in India • technical experts from collaborators and training of Indian counterparts. by Gajendra Singh A policy of protection of domestic industry INDIA was introduced, wherein; imports were totally prohibited if local manufacturing capabilities were adequate for meeting demand. Import 1. Introduction tariffs were levied in other cases where local manufacturing, though set up, was inadequate, Agricultural mechanization made a small necessitating imports. As industrialization beginning with the introduction of imported progressed, exemptions from licensing were tractors and by acquiring war surplus tractors liberalized first to Rs 10.0 million, than to and bulldozers for undertaking, basically, land Rs.30.0 million, and further to Rs 50.0 reclamation and to some extent mechanical million. During 1992-96, licensing was cultivation. In 1947, Central Tractor further liberalized and most of the industries Organization and a few State Tractor were de-licensed. Development Councils for Organizations were set up, which, during various sectors of industry were also set up at 1947-1959, reclaimed about one million the national level to advise the Government hectares of land. This in turn created demand on the steps to promote and foster industry. for tractors to undertake follow up cultivation The growth of the Farm Equipment Industry in the reclaimed areas. The number of tractors in India has to be viewed in the backdrop of in use estimated by [1] was 8,500 in 1951, this national scenario. 20,000 in 1955 and 37,000 in 1960. Up to 1960, the annual demand of tractors was met entirely through imports. 2. Tractor industry: 1961 -70 When planned economic development of the Development of the tractor industry in the country was launched in 1951, tractor industry sixties was dictated by the anxiety to promote was included in the “Core Sector” which mechanization of agriculture by encouraging indicated its strategic importance. Its growth local manufacturing of tractors and at the and development policies were, therefore, same time, protecting the interest of farmers reviewed on Plan to Plan basis. As in the case by making them available tractors at the of all other industries, farm equipment reasonable prices. The tractor manufacturing industry had to follow the legislation enacted in India started in 1961. The names of the under Industrial Development and Regulation units, their collaborators and the year of Act, 1951, the main features of which were: commencement of local manufacture are • reservation of certain sectors of core and given in Table 1. First four entrepreneurs heavy industry for the Government i.e., were representing trading houses as dealer or steel, machine-tools, aircraft, etc.; sub-dealer of tractors, the fifth, Mahindra & Mahindra, was a major player in the • reservation of certain class of items automobile sector. These units were licensed exclusively for the defined small scale in 1960-61 with aggregate capacity to sector; manufacture 11,000 tractors. Though all these • necessity of obtaining an industrial license units went into production subsequently, it from the Government of India for was noted that pace of installation of manufacturing any new article when production capacity was slow. On the other capital investment in land and building hand, the demand of tractors was increasing at exceeds Rs 1.0 million; a steep rate and expected to grow further in • the ensuing years. Besides considering in- phased local manufacturing program; dustrial licenses to add the additional • imported plant and machinery; production capacity, import of tractors contin- ued to meet the demand of farmers. As the 159 the demand of farmers. As the prices of entrepreneurs in the process of establishing tractors imported from the East European local production facilities. With more countries were lower than locally manufacturers entering in the field in a manufactured tractors, the duties on imported stagnant demand situation, the market became component were raised to 40%. intensely competitive from 1973 onward. The Simultaneously, to protect the interest of Statutory Price Control on tractors was lifted farmers in the situation of acute shortage of in October 1974. As a result of Government tractors Government imposed statutory directive to the commercial banks to increase control on the selling prices of indigenously their proportion for rural lending, the manufactured tractors in 1967. However, this commercial banks opened branches in rural control was withdrawn in October 1974 when areas. This action was supported by the supply position was eased. To meet the availability of refinance facilities to growing demand, the Government decided to commercial banks for agricultural invite additional entrepreneurs into tractor development from National Bank for manufacture in 1968. As given by [2], the Agriculture and Rural Development. Credit production of tractor started in 1961 with 880 available to farmers increased significantly units which rose to over 5000 units in 1965 and the tractor market expanded rapidly from and crossed 20,000 units in 1970 (Table 2). the beginning of 1977. The production of There were about 52,000 tractors in use in tractors more than doubled during a five year 1965, which increased to 146,000 tractors in period. It was 33,000 units in 1975 and 1970. increased to over 71,000 units in 1980 (Table 2). The number of tractors in use also crossed 500,000 units mark. 3. Tractor industry: 1971-1980 The Government decision to invite new 4. Tractor industry: 1981-90 entrepreneurs to manufacture tractors in 1968 The expansion in the tractor market during and the sudden upsurge in demand due to late seventies led to the setting up five more Green Revolution led to a flood of requests units for the manufacture of tractors. One of for new collaborations. Of these only 6 units these was in the public sector in collaboration established the manufacturing facilities with an U.K. firm and the rest were in the (number 6 to 11 in Table 1). Escorts private sector. Only one firm in private sector established Escort Tractors Limited and had collaboration with an outside (Romanian) started manufacturing Ford tractors in 1971 in firm and others used indigenous know-how. collaboration with Ford, U.K. Three of these These units are listed in Table 1 at serial units, namely, Kirloskar Tractors, Harsha numbers 12 to 16. Tractors and Pittie Tractors could not survive After having attained complete indigenous and closed down their plants. During this production by most of the already established period, the emphasis was on indigenous tractor units, the post 1980 period was marked production of the tractors and the Government by increased production from all units. extended full support to old and new However, except VST Tillers & Tractors, entrepreneurs to establish local manufacture. other four newly established units during The credit facilities to the farmers for the eighties could not sustain the market purchase of tractors were increased and competition and closed their plants. In order liberalized to enlarge the market. The import to make available tractors to the farmers with of tractors, both fully built and in CKD form small holding of land, the Government to new entrepreneurs was continued. Because exempted production tax (excise duty) for of oil crisis in 1973, and the resultant tractors of 9 and lower drawbar kW. This economic crisis, the import of fully built exemption was extended to the tractors fitted tractors was banned in 1973 except under 3 with engine not exceeding 1800 cm specific World Bank Projects and CKD import to new entrepreneurs in the process of 160 subsequently. This phase of industry was from all units during 1997 was over 255,000 comprised of consolidation and up-gradation units (Table 2). The number of tractors in use of technology to improve the quality of in India at the end of 1997 was estimated to products. The Working Group in the Ministry be over two million units. of Industry and later on a Group in the Ministry of Agriculture, recommended to improve fuel efficiency of tractors by fixing 6. Present status and future plans of norms of specific fuel consumption at power tractor industry take-off shaft. They also recommended Tractor manufacturing industry is now well improving the parameters of noise and established in India. Out of the sixteen units vibration levels, emission levels, ergonomics who took up manufacturing before 1990, six and safety aspects. The industry grew slowly units, namely, Eicher, Escorts, HMT, in the early eighties and produced about Mahindra & Mahindra, PTL and TAFE are 75,000 tractors in the year 1985 (Table 2). In major manufacturers (Table 3). Out of the six the later half of eighties industry grew very units, five were set up with foreign col- fast and produced almost 140,000 tractors in laborations and one with the indigenous 1990 (Table 2). The number of tractors in use know-how (Punjab Tractors). Therefore, it in India reached one million units mark in may be said that the establishment and the 1989 and in 1990 the population of tractors present status of the tractor industry in India was estimated to be 1.2 million units. Export owe a great deal to the foreign collaborators of tractors mainly to the African countries, who supported the Indian entrepreneurs also started in the eighties. Thus, India, a net during initial phase of manufacture. All these importer up to mid seventies became an six units are now on their own and having exporter during eighties. mastered the manufacturing technology of tractor, have developed capabilities to expand their base further. Ancillaries have also been 5. Tractor industry: 1991-98 well established and the industry is no longer Indian industry has seen a remarkable change dependent on import of components or from a complete protection in early days to a systems. Mahindra & Mahindra has emerged competition in the international market during as the largest manufacturer with about 68,000 nineties.
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