India heads toward the "one million" quota

With 912,000 tractors sold in 2022 and 680,000 in the first nine months of this year, the Indian Subcontinent remains the world's leading market. Investment in mechanization is necessary, given a gross agricultural area of 200 million hectares and a growing population. The objectives of the agricultural policy are to provide food security as well as to diversify production to improve the food style and profitability of agriculture

To paraphrase Nanni Moretti of Red Dove and his "words matter," when it comes to India, numbers matter - and really significant ones.

By now, it is a fact that we are talking about the first country in the world in terms of population - it overtook China in early 2023 - with almost 1.5 billion inhabitants, occupying an area of more than 3.2 million square kilometers - roughly a dozen times Italy's - and with a Gross Domestic Product that is growing steadily (by an average of 7 percent per year since 2014) and has progressively surpassed those of Russia, Brazil, Canada, Italy, France and the United Kingdom and already has those of Japan and Germany in its sights.

Impressive figures, as the Anglo-Saxons would say, which are instead in line with Goldman Sachs Research's projections that India's GDP will surpass that of the euro area within 25 years (the estimate speaks of 2051) and that of the United States within 50 years.

These predictions seem surprising to those who know and have seen the realities of the Indian subcontinent, but they find constant confirmation.

From 2014 onward (the year of the launch of the Business Reform Action Plan), the development policy document of Narendra Modi, the prime minister still in government today, in addition to GDP growth, India has brought average unemployment below 10 percent, the inflation rate has fallen to around 6.5 percent in line with the nominal interest rate, the ratio of public debt to GDP is about 90 percent (significantly better than Italy's, well over three digits to be exact). Exports, the centerpiece of the country's entire economic strategy, have reached $650 billion. India is also the country with the highest number of migrants in the world, capable of generating, according to the World Bank, over $100 billion in remitted resources.

Of course, the most critical analysts correctly point out we are talking about a country that still has an income per inhabitant that amounts to less than $2,500 of GDP per capita per year (Italy, again, to have a basis for comparison, is around $35,000).

But again, it is the trend that makes New Delhi smile.   In the past decade, this value has more than doubled, and expectations are for a further doubling in a shorter time frame. Even more so if the first stated goal of the Modi strategy, to turn India into the world's premier manufacturing hub, is achieved.

This target is strengthened by the fact that India is currently one of only three economies in the world capable of generating annual economic growth in excess of $4-500 billion, as several reports from leading investment banks repeatedly point out.

 

Agriculture is still a major player.

In this scenario and in a country that alone has just under a third of Europe's entire land area, agriculture remains the leading sector.

Out of a gross area of more than 200 million hectares, as many as 140 million are sown, more than half irrigated.

Even today (latest figure for 2021), 44 percent of Indians are active in the primary sector. This figure is declining, but slightly when considering that in 2011, the figure was at 49 percent.

 They are employed in field crops, with grains dominating (rice in the first place with over 40 million hectares) plus 25 million hectares of oilseeds, livestock farming (over 300 million cattle and 200 million sheep) and horticulture to which just under 20 million hectares are allocated (about 8 in fruit farming, 11.5 in horticulture).   We will get back to you on this last passage.

With these numbers, India has been the world's leading agricultural mechanization market in numerical terms for several years now. Once again, the numbers do the talking. In 2022, the astonishing figure of 912 thousand tractors sold was reached (the entire European Union sails around 200 thousand units), an all-time high just slightly higher than the 2021 record (903 thousand tractors). This figure is bound to be adjusted upward, given that more than 680 thousand tractors have already been sold in the first nine months of 2023, with a 6.4 percent growth over the same period in 2022.

A trend that, if confirmed, puts in the crosshairs the unthinkable figure of one million tractors sold per year in a country that is already home to the world's largest manufacturer in terms of numbers, Mahindra.

Italy's mechanization contribution.

Again, the most critical analysts point to the fact that India has a basic fleet made up of small powers and technologies that are often dated in the West. Nevertheless, India shows substantial improvement in all segments, with a special focus on foreign proposals. Italian, too, of course.

Several realities (Argo Tractors, BCS, Maschio-Gaspardo, New Holland, SDF, and others…) have long been present in India with their own plants or with production agreements; many other companies have continuous business contacts in the Indian market, which has become one of the main development targets.   The result is a lively and significantly growing interchange on both the import and export sides.  In 2022, Italian imports of tractors and agricultural machinery from India reached a record value of 113 million euros, a figure that is expected to be confirmed in 2023 as well. Exports of tractors and agricultural machinery also reset an all-time record, reaching 43 million euros in 2022. The brightness of business relations and the supply of specialized farm machinery can draw new life precisely from the growth of the fruit and vegetable sector mentioned earlier. Many millions of hectares that can create far more value-added than cereal crops, requiring the cutting-edge technology characteristic of Italian production. Which, moreover, can also be adapted to India's new pro-organic trend. Almost as a matter of curiosity, it is worth mentioning that the federated state of Sikkim is the first 100% organic country.   Curiosity aside, it should be noted that India, with a specific plan, the Npop (National Program for Organic Production), plans to convert several hundred thousand hectares to organic farming, particularly in the Punjab and Chandigarh areas. And this is a development in which the contribution of Italian mechanization can be relevant.

Roberto Bonora