Financial Daily from THE HINDU group of publications
Friday, Jul 11, 2003
Industry & Economy - Exports & Imports
Slump in domestic sales Tractor makers eye global market
New Delhi, July 9
DEMAND for low horse-power tractors in the international market has cheered the tractor manufacturers, who are facing a tough situation in the domestic markets.
According to industry data, the export market has seen a substantial growth of 66 per cent, with export volumes growing to 13,511 units in 2002-03 from 8,144 units in 2001-02.
Points out Mr R.C. Jain, President, Tractor Manufacturers' Association (TMA), "Currently, export of Indian tractors contributes to eight per cent of the total tractor industry. This is expected to cross the two digit mark in the current year."
The export trend was further necessitated by the sharply declining volumes in the domestic industry. "The domestic sales has dropped from 2.62 lakh units in 1999-00 to 1.59 lakh in 2002-03, a drop of almost 40 per cent in the last three years. The surplus in installed capacities has forced them to look beyond the national shores. Also, the Indian product is comparable in terms of performance and features to any other tractor manufactured elsewhere and meets all norms and needs," says Mr Jain.
This trend could be further accentuated with a growing number of MNCs, such as Renault and John Deere, using the Indian operations as a hub for exports especially to the US as well as SAARC countries, Africa and other developing nations. French major, Renault incidentally has even made India (through a tie-up with International Tractors Ltd) a sourcing hub for its Ceres range of tractors.
Additionally, some Indian companies such as Mahindra & Mahindra (M&M) are setting up assembling units in high-growth markets. M&M incidentally, already operates two assembling plants in the US and is learnt to be driving its exports to newer markets including Europe and China.
International Tractors Ltd too is planning to set up a manufacturing facility in Sri Lanka to produce tractors and other agricultural implements.
"A few Indian majors have already established facilities outside looking at the potential and acceptability in those markets. Coupled with recessionary trends in the domestic market, it is but natural that this trend would continue and would contribute further to sales of Indian tractor manufacturers in the coming years," says Mr Jain.
At present, exports from India are mainly to US and SAARC nations. The US alone contributes to over 60 per cent of the total exports in volume terms, 35 per cent exports go to the SAARC countries with the balance going to South East Asia and Africa. "Indian manufacturers are now eyeing the European market which is today a large tractor market in the world," adds Mr Jain.
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