India's Farm Tractor Rental Market: Growth Drivers, Challenges, and Government Subsidies

With a small number of organized players, the India Farm Tractor Rental Market is in infancy stage and showing positive growth trend. Like cab services, farmers can now rent tractors whenever they need them, but the targeted market is huge and there is little consumer awareness, which is one of the major challenges the players are facing. As a result, Mahindra & Mahindra's Trringo farm equipment rental platform is no longer focused on the farm tractor market.

Despite there being nearly 675 million people employed in the agricultural sector nationwide, the number of tractors held by farmers is steadily dropping, with just about 35 million tractor owners as of 2022. This comparison demonstrates how low the penetration is while also highlighting the market's anticipated growth potential for rental tractors.

The demand for farm equipment rental services is growing as a result of the high cost of new farm equipment purchases and the related maintenance services. By the use of rental services, farmers are able to benefit by avoiding the expense of maintaining farm equipment. Farmers who rent farm equipment can harvest their crops on schedule without having to put a significant amount of money down on expensive agricultural machinery.

Challenges in Farm Tractor Rental Market
The Indian Farm Tractor Rental market is highly unorganized led by local ginners, as farmers in India are uneducated and they still prefer to rent from local tractor owners to avoid stepping out of their comfort zone. Even though India is home to large number of smartphone owners and internet penetration is increasing rapidly in rural areas, still the ratio of small farmer interaction to the technologies are very less, therefore famers still think going to organized players will increase their burden, owing to this they prefer local vendors.

Growth Driving Factors
The growing use of precision agriculture methods is one of the major factors propelling growth in the Indian tractor rental market. These techniques use advanced technologies such as GPS mapping and sensors to optimize farming operations, leading to higher yields and improved efficiency. As a result, farmers are increasingly turning to tractor rentals to access these technologies and improve their farming operations.

A Boost in Agricultural Household Income will Drive Demand for Tractor Rentals
The average monthly income for agricultural households in the nation was Rs 10,218 in 2019 compared to Rs 6,426 in 2014, according to the Economic Survey 2021–22. There is a strong need for mechanisation to increase food grain productivity, which presents opportunity for growth for the farm tractor rental service providers.

Measures Taken by the Government to Uplift Farming in the Country
Subsidies in Andhra Pradesh
The scheme, Rythu Radham, included the deployment of tractors. Yet, in order to be qualified, one must own at least one acre of land, refrain from owning a tractor, and possess all relevant documentation. Moreover, ICICI Bank offers loans with a 5-year repayment period.

Subsidies in Maharashtra
The state promotes the adoption of contemporary tools and methods as part of the Agricultural Mechanization Plan. Similarly, it offers a 35% tractor subsidy and a 50% subsidy for other machinery to small, marginal, and SC/St farmers.

Subsidies in Madhya Pradesh
Small tractors are eligible for a subsidy from the MP government under the Macro-Management Program. Thus, the state and union governments are involved in this scheme. As a result, the programme is available to all farmers. Also, this programme is successful since Madhya Pradesh has a limited tractor supply. Moreover, loans are also accessible to assist the farmers even more.

Subsidies in Assam
Tractor subsidies are handled by the Chief Minister Samafre Gramya Unnayan Yojana (CMSGUY) in Assam. CMSGUY thus provides a 70% discount up to Rs 5.5 lakhs.

Subsidies in Uttar Pradesh
In UP, the Krishi Yantra programme is used to purchase tractors. As a result, it offers Rs. 45,000 or 25% of the cost relief, whichever is less. Moreover, Prathama Bank offers tractor loans in collaboration with Mahindra, Swaraj, and Sonalika.

Key Developments in India Tractor Rental Sector

• Expansion of digital platforms that connect farmers to equipment and service providers.
• Farmers’ income doubled in five years from financial year 2017-18 to 2021-22 for certain crops like soyabean in Maharashtra and cotton in Karnataka. In all other cases, income rose in the range of 1.3-1.7 times
• The Indian rural economy has historically been gauged by the tractor business. With one-third of global manufacturing, the Indian tractor market has grown to be the largest in the world.
• The Indian government and several organised players entered the picture in recent years; the organized companies began making investments in the industry, and they later established online apps and service centres that are assisting farmers by making renting tractors simple.

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