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Home Agriculture and Animal Care Future Outlook of Indian Used Agricultural Equipment Market: Ken Research

Future Outlook of Indian Used Agricultural Equipment Market: Ken Research

1. Ambitious Government initiatives, increasing contract farming and demand for higher crop yield are some of the opportunities in the Used Agri-Equipment market

With government aiming to decrease imports for equipment such as power tillers, there is opportunity for local manufacturer to enter the domestic Agri-equipment market. Increased participation of corporates that are entering into farming through contract farming agreements will lead to increased use of implements and machinery on the fields creating need for more Agri-equipment.

With growing population and demand for higher yield, India is expected to overtake China and become the most populous nation in the world by 2027. This means an ever-increasing demand for higher yield of food-grains, which will drive up demand for mechanization. It has been observed that the ratio of agricultural labor to India’s overall workforce will continue to decline. This inherently will drive the need for mechanization.

2. Used Agricultural Equipment market in India has grown by CAGR 16.5% by volume in 2021

Indian Used Agricultural Equipment MarketThe used agricultural equipment market in India has seen a rise in the number of equipment sold in FY’16 to the equipment sold in FY’21, with a five year CAGR of 16.5%.

This growth can be attributed to recent government initiatives, rising adoption of mechanization in India, paired with economic feasibility of purchasing second hand equipment for Indian farmers, most of whom are small and marginal farmers, and thus, lack the capital to invest in a new equipment.

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3. Small land holding area makes the renting of equipment more practical for most farmers; farmers having access to higher machinery capacity are the suppliers

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India has a majority land holding size of area below 0.5 hectares, which is continuously decreasing. Rental market for agricultural equipment is a viable option for the marginal holding farmer to allow mechanization due to its lower capital requirement and being cheaper than individual ownership. Rental sector is almost entirely unorganized, with local players dominating the market with their established connections.

A majority of farmer co-operatives and association also pool their resources to rent equipment on need basis. This is because farmers in need of renting equipment also fall in the lower income group, with those renting out equipment being large farmers themselves, forming a symbiosis among farmers.

4. Fragmented landholding, lack of awareness and training, lack of financial schemes for small & marginal farmers are some of the major constraints in this market which can be addressed to reap benefits

Fragmented landholdings, diverse soil conditions and cropping pattern is present in India. Insufficient trainings and awareness along with adequate know-how of schemes, business models and applications processes has been missing amongst farmers. Poor access to finance with financing schemes depending on the applicant farmer’s profile for determining eligibility, creating an issue for small and marginal farmers acts as a major disadvantage.

Poor implementation of government support programs, with tiresome and complicated process availing of subsidy schemes under initiatives such as SMAM, leads to lower-than-expected adoption rates. Inefficiencies associated with lack of awareness and difficulty in filling online forms/applications by farmers is a disadvantage while availing schemes.

Operational constraints such as Continued focus on tractor sales development ignoring other equipment, Low Quality and serviceability due to heavily unorganized nature and Inefficiencies in farm equipment testing is hindering Agri-equipment adoption in India by farmers.


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