NCAER Report on Farm Machinery Industry in India

• 09 Feb 2023

For Prelims: Farm Machinery Industry, Farm power, Science & Technology (S&T) Cluster programme, Make in India, Sub-Mission on Agricultural Mechanization Scheme.

For Mains: Major Challenges Related to the Farm Machinery Industry, Ways to Revitalise Farm Machinery Industry.

Why in News?

National Council of Applied Economic Research (NCAER) Report on "Making India a Global Power House on Farm Machinery Industry" released recently.

• NCAER has analysed the non-tractor farm machinery industry from both demand and supply side perspectives, bringing out the challenges in the sector, and recommending measures & reforms by benchmarking global practices.

What is the Farm Machinery Industry?

• The Farm Machinery Industry is an industry sector that produces and supplies a range of machinery, equipment, and tools used in agriculture and farming activities such as ploughing, planting, harvesting, and more.
  • These machines are designed to improve productivity and efficiency in farming operations, and the industry encompasses both small-scale and large-scale farming equipment.
• Some examples of products offered by this industry include tractors, combine harvesters, irrigation systems, tillers, and more.

What are the Major Challenges Related to the Farm Machinery Industry?

• Limited Domestic Demand:
  • There is a mismatch between what the organised farm machinery sector produces and the needs of small and marginal Indian farmers.
  • Although there is high State-level variation, in 2018–19 barely 4.4% of farmer households in India owned a tractor, 2.4 % used a power tiller and 5.3 % owned one of the four machinery items.
• Dependence on Imports for Non-Tractor Machinery:
  • Farm machinery exports are driven by the tractors, and farm machinery imports are driven by non-tractor farm machinery imports.
  • Further, the direction of trade is lopsided where 53% of non-tractor farm machinery imports are coming from China.
• Lack of Adequate Power:
  • With the increase in intensity of cropping, the turnaround time is drastically reduced. Availability of adequate farm power is very crucial for timely farm operations for increasing production and productivity and reducing losses.
  • However, our farm power availability is at 2.49 Kw/ha in 2018-19 which is much lower as compared to Korea (+7 kw/ha), Japan (+14kw/ha), USA(+7kw/ha)

How can the Farm Machinery Industry be Revitalized?

• Encourage Local Innovation:
  • Entrepreneurship ecosystems should be created and encouraged in local education institutes; they may also partner with farm machinery firms.
  • For help on patents, district-level patent offices need to be opened and strengthened and state agricultural universities’ patent offices need to cater to the needs of local communities.
    • Research-linked incentive (RLI) is also recommended for innovations in light farm machinery and futuristic precision farming.
• Non-tractor Farm Machinery Cluster:
  • There is a need to set up a non-tractor farm machinery Science & Technology Cluster under the aegis of the Science & Technology (S&T) Cluster programme.
• Level-playing Field for Indian Manufacturers:
  • Given the unfair competition that Indian manufacturers face, it should be mandated that farm machinery that is sold under government subsidy on government DBT portals (both Central and State) follow the revised public procurement norms with regard to preference to ‘Make in India’ goods.
  • Localisation should be promoted by simultaneously maintaining international quality standards.
• Vision for Export Hub:
  • The Ministry of Agriculture & Farmers Welfare is already promoting farm mechanization through various schemes and programmes like the Sub-Mission on Agricultural Mechanization Scheme. But India needs a vision for the next 15 years to translate itself into a production and export hub for the non-tractor farm machinery.

Source: PIB