Punjab, Haryana buck the trend in tractor sales

Vijay C Roy

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Tribune News Service

Chandigarh, July 8

The northern states comprising Punjab and Haryana have bucked the trend of sluggish demand for tractors in the current fiscal. In the first two months, tractor sales in the two states witnessed a marginal decline of less than 2% as compared to steep 15% decline recorded across the country.

According to industry data, during April-May 2019, 12,725 tractors were sold in Punjab and Haryana as compared to 12,957 units in the corresponding period of the previous fiscal. The two states contribute around 10-15% of the total tractors sales in the country and are considered highly mechanised states as compared to the rest of the country.

Nationally, 1,15,437 tractors were sold in the first two months of the current fiscal as compared to 1,35,953 tractors sold during the corresponding period of the previous fiscal, registering a decline of 15%.

Industry experts said the sluggish demand for tractors is attributed to weaker monsoon last year, especially in the southern region as it has adverse impact on crops. Low crop yield means dampened rural sentiment and reduced farmers’ income, thereby resulting in less expenditure on farm machinery and equipment.

“There are two major factors attributed to steep decline in tractor sales in the current fiscal year. Firstly, it was a weak monsoon which impacted farmers’ earning and led to decline in sales, especially in the southern and western regions. Secondly, high inventory level at dealers’ end put brakes on factory dispatches to respective dealers,” said AS Mittal, vice-chairman, Sonalika Group. The tractor sales in India are counted as factory dispatches and not retail sales, so weaker dispatches leads to low numbers.

“The sales were largely impacted in the western and southern regions but in markets like Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Chhattisgarh, sales were more or less same,” said Mittal.

Since tractor business is largely dependent on agriculture, industry observers now pin their hopes on the upcoming monsoon season which would help in streamlining the rural cash flow. 

The performance will improve only if there is good monsoon as agriculture is still dependent on rains. “If the country witnesses a decent rain, then the industry might recover later. With the current forecast of monsoon, sales may improve in the second quarter of the current fiscal,” said a senior executive working with a prominent tractor manufacturer.

In addition to this, the industry is pinning hopes on bumper harvest, farm loan waivers in various states, increase in the MSP and ease of finance to drive the sales.

The Indian tractor industry witnessed a double-digit growth for the third consecutive year in financial year 2018-2019. In FY 2018-19, sales of tractors grew by 10.24%.