The Hindu Business Line : Farm credit package sparks optimism among tractor makers

THE farm credit package announced by the Finance Minister last week has given tractor manufacturers reason to cheer. According to tractor makers, availability of credit at the grassroot level is likely to provide a fillip to sales of tractors.

"Farm credit will augur very well for the tractor industry. It would particularly help in financing of tractors by rural and cooperative banks. There had been a shortage of funds last year," Mr R.C. Jain, President, Tractor Manufacturers Association (TMA), said.

At present, about 95 per cent of the tractors sold are financed. Finance availability for purchase of a tractor has improved in the past year with commercial banks rolling out attractive finance schemes and the interest rate on tractor purchases declining to about 9.5 per cent.

However, the tractor industry feels that there is scope for the rate of interest to drop further to a level of about 8 per cent.

The industry has also asked the Finance Ministry to reduce excise duty on tractors to 12 per cent from the current level of 16 per cent in the forthcoming Union Budget. "The savings would be passed on to the consumer, as manufacturers are keen to grow the market," Mr Jain said.

After seeing a growth of 11 per cent in the industry last year, the first two months of the current fiscal have also been very encouraging. Sales of tractors have grown by about 46 per cent in April-May, with the monsoons being on track so far this year. According to Mr Jain, the industry is expected to grow by about 15 per cent this fiscal to 2.25 lakh units. Better credit availability for farmers will go far in helping the industry reach its targets.

More Stories on : Farm credit | HCV/LCV/Tractors

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