Tractors are essential for boosting productivity and efficiency in farming. The contribution of the Indian agricultural sector to the country’s GDP is around 18-19%. It provides livelihood to nearly 13 crore farming households. However, only 80 lakh farming households in the country have tractors. It indicates low penetration and the potential for growth in this sector.
However, the high cost of new tractors can be challenging for small-scale farmers and those with limited finances in rural areas. This is where used tractors can make a big difference, benefiting the farming economy in India.
Used Tractors Market in India
The used tractor market in India has witnessed a steady rise since 2016. As per Financial Express, the valuation of the Indian tractor market stood at $7.50 billion in 2020. It is expected to grow at a CAGR of around 10% to achieve the $12.70 billion mark by 2030. The market for used tractors is significant. When we include revenue from financing and insuring used tractors, the overall value reaches $10 billion.
Further, a report by Ken Research says that the used tractor market is the most significant contributor to the overall used agricultural equipment market, with nearly 81% of the total sales by volume. This market will grow at a faster rate than the new tractor market due to the involvement of a larger number of small and marginal farmers in India.
The Ken Research Report, further says that used tractors are the leading financed commodity for used agricultural equipment. The organised finance purchase of used tractors has grown at a CAGR of around 29%.
Role of Used Tractors in the Indian Rural Economy
Adopting used tractors can contribute to economic growth in rural India in several ways:
Financial Inclusion
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With access to used tractors, the rural Indian economy can experience a boost in financial inclusion. The availability of used tractors allows many farmers who could not afford new ones to improve their agricultural practices
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Over fifty banks and NBFCs provide financing options in the used tractor segment. Easy credit is essential for used tractors and the significant lending segment of rural areas
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The down payment for a used tractor is also much lower than a new one, ranging from INR 50,000 to 1 lakh. It can be easily INR 1.5-2 lakhs for a new tractor.
Improvement in Living Standards
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The greater access to used tractors in the rural areas will give a boost to mechanization in agriculture, which in turn, can increase productivity and income. As a result, the living standards of farmers will improve.
Job Creation
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The growing use of used tractors in rural India can create job opportunities. As more farmers invest in tractors, there will be an increased demand for services like maintenance, repairs, operators, and rentals. This, in turn, will lead to job creation and contribute to the development of local economies.
Challenges to Increasing Penetration of Used Tractors
There remain challenges in ensuring the wider adoption of used tractors due to various factors. Some of these are:
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Quality worries: Making sure used tractors are dependable and of good quality is important for farmers to trust them.
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Financing limitations: Helping small farmers get better access to money for buying used tractors is necessary.
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Clear and Informed Choices: A clear and dependable market for used tractors with easy-to-find information is important for making smart decisions.
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Deep networks of unorganized market: Even today there is a deep network of unorganized used tractors making them unreliable and not trustworthy. Also, there is poor price transparency which makes the buying journey a difficult one for the farmers.
How to Increase Used Tractor Penetration
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Quality checks and certifications for used tractors should be the same for everyone, giving buyers confidence
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Microfinance initiatives for small farmers who want to buy used tractors can make them more powerful
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Online platforms such as Tractorkarvan that share clear information about used tractors can make buying them easier.
How Can Tractorkarvan Help in the Adoption of Used Tractors?
Tractorkarvan is a leading platform trusted by Indian farmers to fulfill their farm mechanization dreams. We offer end-to-end assistance to them to explore, buy, sell, and finance their used tractor. In an era where Tractors are still not accessible to all, Tractorkarvan makes their second-hand tractor buying experience smoother and more convenient. In addition to this, we also offer a range of farm implements, harvesters, and Tractors to address all their farming-related requirements.
