Making India a Global Power House on Farm Machinery Industry

Context- National Council of Applied Economic Research (NCAER) has recently released a Report on “Making India a Global Power House on Farm Machinery Industry”.

Key Highlights 

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

 Farm Machinery Industry

• The Farm Machinery Industry is an industry sector which produces and supplies several varieties of machinery, equipment, and tools used in agriculture and farming activities including ploughing, planting, harvesting, and more.
• These farm machines are designed to ameliorate productivity and efficiency in farming activities, and the industry encompasses both small-scale as well as large-scale farming equipment.
• Some examples of products offered by the farm machinery industry include tractors, combine harvesters, irrigation systems, tillers, and more.

Major Challenges faced by the Farm Machinery Industry

• Limited Demand:

• • • There is a discrepancy between what the organised farm machinery sector produces and the requirements of small and marginal Indian farmers.
    • Although there are high State-level disparities, in 2018–19 hardly 4.4% of farmer households in India owned a tractor, 2.4 % owned a power tiller and only 5.3 % owned one of the four machinery items.

• Huge Dependence on Imports for Non-Tractor Machinery:

• • • Farm machinery exports are mainly driven by the tractors, whereas farm machinery imports are mainly driven by non-tractor farm machinery imports.
    • Again, the direction of trade is asymmetrical where 53% of non-tractor farm machinery imports are from China.

• Insufficiency of Adequate Power:

• • With the rise in intensity of cropping, the retraction time is excessively reduced. 
  • Availability of adequate farm power is also very crucial for timely farm operations for increasing production and productivity and reducing losses.
  • However, the farm power availability in India is at 2.49 Kw/ha in 2018-19 that is much lower as compared to Korea (+7 kw/ha), Japan (+14kw/ha), USA(+7kw/ha)

Ways to Revitalize Farm Machinery Industry

• • Encourage Local Innovation:
    • Entrepreneurship ecosystems must be created and encouraged particularly in local education institutes; as they may partner with farm machinery firms.
    • For help on patents, district-level patent offices should be opened and strengthened and state agricultural universities’ patent offices should cater to the requirements of local communities.
    • Research-linked incentive (RLI) is recommended for innovations in light farm machinery and futuristic precision farming.

• Non-tractor Farm Machinery Collection:

• • • There is a need to set up a non-tractor farm machinery Science and Technology Cluster under the aegis of the Science & Technology (S&T) Cluster programme.

• Level-playing Field for Indian Manufacturers:

• • • Given the unfair competition which Indian manufacturers constantly face, it should be mandated that farm machinery which is sold under government subsidy on government DBT portals (both Central and State) follow the revised public procurement norms regarding preference to ‘Make in India’ goods.
    • Localisation must be promoted by at a time maintaining international quality standards.

• Goal for Export Hub:

• • The Ministry of Agriculture & Farmers Welfare is already promoting farm mechanization through several schemes and programmes such as the Sub-Mission on Agricultural Mechanization Scheme. But India should have a vision for the next 15 years to translate itself into a production and export hub for the non-tractor farm machinery.

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