Diesel Tractors Will Be More Expensive Beginning In January 2023

According to Rating Agency ICRA, the new emission standard, Bharat Stage TREM IV, for tractors with engine power greater than 50 horsepower set to take effect in January 2023, will affect approximately 7-8 percent of the domestic volume, and manufacturers are expected to gradually pass on the cost increases to customers.

Another change brought about by the revised standards will be OEMs realigning their portfolios with tractors that offer more torque at a lower horsepower.

OEMs are rearranging their product lines, adding tractors with more torque and less horsepower to the mix. The HP-wise mix would change as a result, favoring the 41–50 HP segment at the expense of the over 50 HP segment."  ICRA Vice President, Corporate Ratings Rohan Kanwar Gupta predicted.

Based on a 10-15% price increase, ICRA estimates that the production cost of a 50 hp category tractor will rise by Rs. 1 to 1.3 lakh. However, 50-hp category tractors account for only 7 to 8% of total industry volumes; the majority of tractor sales are in the 30 to 50-hp range.

According to ICRA, a large proportion of the overall industry, less than 50 horsepower, accounting for approximately 92 percent of sales in FY22, will continue to be governed by Bharat Stage TREM IIIA norms.

The revised emission norms for the over 50-HP segment were originally scheduled to go into effect in October 2020 but were postponed several times due to the government taking into account industry representations amid the disruptions caused by the pandemic.

India remains a medium-to-high horsepower tractor market, with around 80% of sales coming from the 30-50 horsepower categories.

"Only tractors with more than 50 HP would be subject to the updated emission standards, which would take effect in January 2023 and have an effect on 7-8% of the industry's total volume. However, for the price-sensitive farming community, the pass-through of the hike to customers is expected to be only gradual " said Rohan Kanwar Gupta.

The Original Equipment Manufacturers (OEMs) readily have the technological know-how to meet the revised norms because the export models already meet the evolved emission norms, he added.

According to ICRA, the transition to new emission standards will revamp the tractor horsepower mix.

In India, emission standards for tractors and construction equipment are regulated separately from the broader automobile industry, which has already transitioned to BS-VI standards beginning in April 2020.

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