Tractor makers blame PSU banks for falling sales

Tractor manufacturers today blamed public sector banks' reluctance to provide credit for drastic slowdown in sales and warned that farm productivity could be hit if the issue is not addressed.

"Tractor sales are affected due to conservative approach of PSU banks while offering credit to farmers," Tractor Manufacturers Association President L D Mittal said.

Tractor sales declined by 20 per cent in November though the demand was high due to a good monsoon this year, he added.

During April-November, tractor sales grew by 2 per cent.

Rohtash Mal, executive director and CEO of Agriculture Machinery Group, Escorts, said there is still demand for tractor, which has grown by 15-20 per cent but it could not be converted into sales because of decline in flow of credit at the ground levels.

"About 96 per cent of tractors sold in the country is financed," Mal said.

Since tractor is an important component in mechanisation of Indian agriculture, the non-availability of credit to farmers could impact farm productivity, he added.

Quoting Nabard figures, Mal said farm credit during April-September 2008 stood at Rs 90,000 crore whereas the target for the period was Rs 1,40,000 crore.

TMA would ask the government to reserve eight per cent of agricultural credit for tractor and other farm implements so that mechanisation process could grow faster, Mittal said.

Asked if the recent announcement on excise duty cut would have any impact on tractor prices, Mal replied in the negative as tractor does not attract excise duty.

"I do not think so. But cost pressure is there as volume has been affected." On an average a tractor costs Rs 4.5 lakh to a farmer.