Electric Tractors: A Modern Technology for Sustainable Energy Use in Agriculture

Saurabh Gupta, Partner, Power & Utilities, KPMG in India and Prakash Powdel, Associate Director, Power & Utilities, KPMG in India

The Government of India’s (GoI) vision of net-zero emissions by 2070 is driving concentrated efforts towards electrification of energy consumption and decarbonization of electricity grid. A modern technology that aligns with this effort in the agricultural sector is electric tractors (e-tractors). E-tractors can help transition from traditional diesel-powered tractors and encourage the integration of renewable energy into the grid for net zero emissions.

This is important as tractors are a dominant source of energy consumption in the agricultural sector and an important means of farm mechanization. Over the years, the GoI’s effort of improving farm mechanization through schemes like the Sub-Mission on Agricultural Mechanization (SMAM) have significantly promoted tractors through upfront subsidies, establishment of Custom Hiring Centers (CHCs) with affordable leasing options, etc. Such efforts have boosted tractor adoption, and improved farm mechanization levels to 47%. Continuing this trend, as India works towards improving farm mechanization levels to 75-80% in the next 25 years, promotion of e-tractors will set the right path towards sustainable energy use in agriculture.

Important dimensions supporting the business case for e-tractors include:

Reduction in emissions and import bills: Tractors account for ~8% of India’s annual diesel consumption, which translates to ~4% of the fuel import bill and ~6% of agricultural CO2 emissions. Therefore, transitioning to e-tractors will aid in reducing energy import bills, improve local air quality due to zero tail-pipe emissions, and with renewable energy-powered charging infrastructure, ensure net zero emissions and energy security.
Retaining export dominance: India is a key tractor exporter to various markets with ~10% of the domestic production exported in FY244, majorly across North America and Europe. Therefore, with the announcement of specific initiatives in countries like US, Netherlands, etc. for the promotion of e-tractors, India would also need to gear up to such demand shifts to retain its export dominance.
Improving farmers’ net income: Transitioning to e-tractors has a direct impact on the cost of production through reduced cost of fuel and maintenance compared to its diesel counterparts, thereby contributing to GoI’s goal of doubling farmers’ income.
Enhancing farm output: E-tractor technology is miles ahead of its diesel counterpart, offering superlative performance powered by a unique interplay of higher torque, precision control, improved compatibility with implements, safer and improved work conditions, among others.
Promoting data-driven efficient farming: E-Tractors also unlock agility in farming operations through autonomous capabilities, remote monitoring etc. and facilitate data-driven farming through AI-integrated solutions for crop and soil health monitoring, etc.

Given the large implications highlighted above, e-tractors can play a pivotal role in the GoI’s electric mobility efforts if backed with the right set of incentives and support mechanisms. A few important priority actions will include –

(i) Embracing e-tractors under existing schemes like SMAM, and revising the testing requirements at the Central Farm Machinery Training and Testing Institute (CFMTTI) to include e-tractors;

(ii) Enabling charging infrastructure for e-tractors comprising of fast-charging facilities at the community level, home/farm-based charging, concessional tariffs for charging, battery swapping stations, among others

(iii) Comprehensive awareness creation programs for adoption of e-tractors coupled with pilot projects, upskilling and capacity-building initiatives;

(iv) Encouraging demand aggregation through a network of CHCs and municipalities/Nagar Palikas, for bulk procurement and bring in economies of scale and cost competitiveness, etc.

(v) Initiatives undertaken by states such as Punjab for provision of incentives on setting up of manufacturing units for e-tractors and by Haryana for provision of demand incentives as part of state EV policies can go a long way in accelerating the adoption of e-tractors in the country.

The recent launch of the PM E-DRIVE Scheme is an encouraging initiative, with new categories like e-ambulances, and e-trucks given due recognition for demand incentives, as well as the mention of other emerging EVs. E-tractors need recognition as one of such emerging EV categories with a promising potential to transform the agricultural sector and create a global competitive advantage for India.

To sum up, while EVs will continue to set the directive for clean mobility transition across vehicle categories, e-tractors can emerge as a segment that will redefine not only mobility but also set the path towards long-term sustainable energy use in the agricultural sector in India. The need is to recognize, incentivize, replicate learning from pilots, and scale efforts.