Demand Outlook on Farm and Agriculture Equipment Market in India by 2024-25: Ache Din for Agriculture Sector and for Equipment OEMs is Definitely Around!

From 56.5% in 1950-51 to ~17% in 2016-17, Share of Agriculture in India's GDP has been on a continuous decline. The decline in growth of agricultural GDP was primarily due to the fall in the production of agricultural crops such as oilseeds, cotton, jute and Mesta, and sugarcane. In 2009-10, despite experiencing the worst south-west monsoon since 1972 and subsequent significant fall in Kharif food grain production, the growth marginally recovered to 0.4 per cent primarily due to a good Rabi crop. Reversal in this decline, will be a critical piece in ensuring India's GDP consistently grow at over 8% in the times to come. Agriculture plays a vital role in India's economy. Over 58 per cent of the rural households depend on agriculture as their principal means of livelihood. Agricultural markets remained fragmented even as attempts were made to integrate markets for goods and services.

Individual farmers increased investment in irrigation and labour saving devices. Simultaneously, they also increased cropping intensity. Investments paid off as the 2007-12 period was a productive one for agriculture. However, from a national standpoint, government did not do enough to complement private investment in agriculture, particularly in irrigation. The economies of scale that come out of public investment in irrigation serve to both boost production and partially mitigate the investment risks of farmers. Instead of public investment, policy was oriented towards enhancing spending in subsidies riding on inefficient delivery mechanisms, which left farmers vulnerable to calamities.

Government has realized that to catapult India into 8% GDP growth trajectory, will be possible if all the three sector i.e. Agriculture and allied, Industry and Services, grows in tandem from strength to strength. In all probability, services sector will reflect growth exhaustion and industry may not compensate for this exhaustion completely, which means the burden to bridge the growth deficit will fall on Agriculture sector. And for agriculture sector to fire all cylinder, Government will have to by reorienting its spending priorities and helping states with their outreach.

India's farm yields need to improve and hence the entire farm and agriculture ecosystem, needs a revival steroid; Crop yields in India are still just 30% to 60% of the best sustainable crop yields achievable in the farms of developed and other developing countries. And poor infrastructure and unorganized retail means India has one of the world's highest levels of post-harvest food loss. Government will have to improve its outlay towards agriculture which involves, augmenting irrigation facility, efficient supply chain for consumption of produce and supply of fertilizer and seeds, cheaper credit facility, crop insurance, regular revision of MSP, mechanization etc.

PM Modi devoted an entire episode of his Mann ki Baat radio talk show to rural issues. He was sympathetic to the plight of farmers buffeted by adverse weather conditions and promised to craft supportive policies. He needs to design them immediately as Indian agricultural sector has entered a challenging phase and the thrust of government policies needs to be oriented towards enhancing investment in irrigation infrastructure. This, in turn, has to be supplemented by smarter outreach to introduce better technology.

These measures are essential to build a robust farm sector. InfraInsights, certainly sees ache din for the Agriculture sector and that evident from the recent initiatives taken in some of agrarian states like Uttar Pradesh, that has gone ahead and announced loan waiver for farmers, other states will definitely follow suite in some form or other.

Eventually, better infrastructure and technology diffusion are key to improving agricultural production. And the Government will do everything possible to fast track the reform process that will transform and eventually lead to growth in agriculture sector. Investing in smarter value chains, improving access to credit, technology and market, insulating farmers from environmental shocks, will create the desired ecosystem.

It's going to be boom time farm and agriculture equipment manufacturers, and it will be only safe to say the best growth is yet to be seen by these OEMs. InfraInsights research report ""Demand Outlook on Farm and Agriculture Equipment Market in India by 2024-25"", aims to provide unparalleled insights on initiatives taken by different state to accelerate growth in agriculture sector, ground reality on what farmers make out of the government support, how it will translate to improved spending on technology absorption and what it will means for agriculture equipment OEMs. Report will be delivered through mix of primary and secondary research and will be an indispensable source of insights and information for companies to future proof their growth plans.