The annual food grain production in India needs to grow to the level of 333 million tonnes by 2050 to meet future demand and farm mechanisation can help achieve the target, says FICCI - Grant Thornton Report

Even though food grain production in India has increased significantly over the years, it is variable due to the dependence on monsoons and other local factors. However, to meet the future demand for food by the year 2050, the annual food grain production needs to grow to the level of 333 million tonnes. As there is a need for significant increase in the productivity levels to meet this demand, an overall farm mechanisation can help achieve this target, says the latest Grant Thornton FICCI report - Transforming Agriculture Through Mechanisation.  The report adds that the use of proper farm equipment can increase farm productivity by up to 30 percent and reduce the input cost by about 20 percent.

The percentage of agricultural workers of the total work force is likely to drop to 25.7 percent by 2050 from the earlier 58.2 percent in 2001. With the current challenges such as strain on diminishing resources, smaller land holdings, reduction in farm productivity, growing urbanisation and drop in the availability of farm labour, there needs to be a greater push for enhancing farm machinery that allows for effective and productive land use.

“There is direct relationship between productivity levels and farm mechanisation. Countries with higher levels of farm mechanisation are able to increase their productivity and therefore are better equipped to meet their intended demand for food. Farm mechanisation in India stands at about 40-45 percent. This is still low when compared to countries such as the US (95 percent), Brazil (75 percent) and China (57percent). While the level of mechanisation lags behind other developed countries, the level of mechanisation has seen strong growth through the last decade,” said Rahul Kapur, Partner, Grant Thornton India LLP.

As far as the farm equipment market in India is concerned, it is estimated to grow at CAGR of over 10 percent during the period 2013-18. The size of the farm equipment sector is estimated at approximately US$ 6.5 billion and has seen strong growth in recent years.

The key challenges plaguing the sector are the cost of equipment and it’s after sales, over reliance on tractor-isation and poor financing of farm equipment.

“Innovation in farm machinery sector will drive the next phase of agricultural growth in the country. The Government of India has been encouraging mechanisation through different policy interventions. The technologies that have evolved in the farm machinery sector in last few years have enormous potential to realise the vision of ‘Make in India’ initiative which can promote investments into the sector,” said A. Didar Singh, Secretary General, FICCI.

To increase mechanization, the report recommends that in addition to increasing the credit facility to the farmers, further establishment of custom hiring centres and development of an institutional framework for these centres is required. It adds that corporate social responsibility funds of corporates can be used for capacity building initiative in the farm equipment space as well as promoting a sustainable agricultural ecosystem. The report also highlights that the proposed GST Bill can have provide more clarity on the implements used in automotive and agriculture sector. This will ensure that implements used as part of farm equipment is not burdened with additional tax.