Agricultural Pump Makers Expect Robust Growth Due to PM Kusum Scheme & Strong Demand in FY 2024-25

According to a recent report by Crisil Ratings, agricultural pump manufacturers are expecting to witness substantial revenue growth of 7-9% for the fiscal year 2024-25. The forecast is supported by a resilient domestic demand for traditional pumps and a surge in interest in solar pumps attributed to the government's PM Kusum Scheme.

Anuj Sethi, Senior Director at CRISIL Ratings, stated, "Factoring in normal monsoons in fiscal 2025, revenue growth for the industry will largely be volume-driven. While conventional pumps may see stable growth at 6-8%, solar pump volumes will grow at a faster clip of 20% YoY, supported by the expected reduction in pump prices."

The agricultural pump industry is primarily dominated by conventional pumps, constituting 90% of the market share, with the remaining 10% comprising solar pumps.

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According to Crisil, demand in this sector has proven to be resilient, with favorable monsoons boosting farm incomes and pump purchases. In contrast, deficient monsoons drive the necessity for pump usage to irrigate crops. The current fiscal year saw volume-driven revenue growth, particularly in conventional pumps, amid uneven monsoons influenced by El Nino weather conditions.

Crisil anticipates that solar pumps will become more affordable in 2024-25 as manufacturers pass on the cost benefits of lower solar module prices, a key raw material comprising 65-70% of the total solar pump cost.

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Furthermore, the rating agency noted that rising order flows under the PM Kusum scheme, set to conclude in March 2026, will drive double-digit volume growth expectations for the next fiscal year. The PM Kusum scheme, aimed at achieving a solar power capacity addition of 30.8 gigawatts by March 2026, comes with total central financial support of Rs 34,422 crore.

The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) has multiple objectives, including de-dieselisation of the farm sector, providing water and energy security to farmers, increasing farmer income, and mitigating environmental pollution. As the scheme gains momentum, agricultural pump makers are well-positioned for a period of sustained growth, with the potential to contribute significantly to the country's agricultural landscape.

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