Punjab farm machinery units hit by unseasonal rain

Unseasonal rainfall in March and April, accompanied by hailstorms, has not only hit farmers but also hurt the prospects of over 2,000 units in Punjab engaged in the manufacture of farm machinery and components, whose sales had already gone into a decline over the past year.

Manufacturers want the state and central governments to encourage the farm mechanisation industry by reducing VAT on purchase of steel and increased allocation of subsidy for the purchase of farm equipment under the Rashtriya Kisan Vikas Yojna (RKYS). They also want a R&D centre in Punjab for upgradation of agricultural machinery.

Though mechanised agriculture has grown steadily over the years, the declining average size of land holdings has restricted the scope for large-scale farm mechanisation. Other farm equipment - such as power tillers, tractor-drawn implements, reapers, threshers, cleaners/graders, zero-till seed-cum-fertiliser drills, raised bed planters, reapers and rotavators - has been adopted but not to the extent that manufacturers had hoped for.

Upkar Singh Ahuja, general secretary, Ludhiana-based Chamber of Industrial and Commercial Undertakings, said, "Manufacturers of farm machinery are going through a rough phase. The untimely rain has reduced the earnings of the farming community, which is reflected in the demand for farm machinery. Bad weather has caused substantial reduction in crop production and affected the demand for farm machinery."

The Indian farm mechanisation industry is estimated at around Rs 4,000 crore. Manufacturers said demand has declined by 30-40 per cent in the last few years. With indigenous technology and competitive pricing, Punjab-based manufacturers cater to the domestic market as well as export to Sri Lanka, Nepal, South Asian countries, Iraq, Iran and southern Africa. It is quality, competitive pricing and service that Punjab's manufacturers primarily depend on.

The existing value added tax of 3.50 per cent on purchase of steel has hurt the farm equipment industry, Ahuja said. Tractor sales fell from 634,151 units in 2013-14 to 551,463 units in 2014-15 - a decline of 13 per cent. The state government, he said, should either reduce VAT to one per cent, or provide reimbursement on VAT charged on the purchase of steel used for manufacturing farm machinery and equipment, as there is no VAT on the sales of farm machinery.

Avtar Singh, a farm equipment manufacturer, said, "The subsidy provided by the central and state governments seems just an eye-wash. Only five per cent of farmers who purchase farm implements are able to get this benefit, as the allocated amount is very small. So, the subsidy set aside for the purchase of farming machinery and implements under the Rashtriya Kisan Vikas Yojna Scheme (RKYS) should be increased."

Manufacturers also want the government to set up a R&D centre in Punjab to facilitate the upgradation of agricultural machinery, to boost both farm machinery sales and food production.