'Domestic tractor industry volumes to grow by 12-13% in FY18'

Mumbai, Jan 2 (PTI) Domestic tractor industry'svolumes are expected to touch all-time high levels in thecurrent financial year at around 12-13 per cent, according toa report.The all-time high volumes, would be riding on improvedfarm sentiments on the back of two consecutive normalsouth-west monsoons, ratings agency ICRA said."We expect the domestic tractor industry to record avolume growth of 12-13 per cent during FY18 with positivegrowth momentum also to spill over in next fiscal," ICRASenior Vice President and Group Head, Corporate Ratings,Subrata Ray said.Over the long term, ICRA continued to maintain along-term annual growth estimate of 8-9 per cent for theindustry, with the long-term industry drivers for the industrycontinue to remain intact.The government remains committed towards ruraldevelopment and agri-mechanisation, a critical component inimproving the state of agriculture in the country, Ray said."This coupled with other factors such as increasingrural wages and scarcity of farm labour is likely to aidgrowth in industry volumes over the long term," Ray added.The domestic tractor industry has recorded a robustgrowth in volumes of 15.7 per cent in the April-November FY18,with the industry continuing to grow at a healthy double digitpace on a month-on-month basis, barring a minorblip attributable to GST implementation, the report said.ICRA said, to assuage the protesting farmers, variousstate governments have waived off farm loans for selectfarmers. However, even though its long-term implications mightbe muddled by moral hazard, it has had a soothing impactfor farm community in the short-term, it pointed out.Overall, along with increased allocations for variousfarmer welfare schemes, enhanced focus of the government oncreating rural infrastructure through increased allocation toirrigation and roads among others, bodes well for the animprovement in the rural economy and the tractor segmentover the medium to long-term, it added.Fears of an adverse impact of a below-normal post monsoon rainfall and resulting weaker reservoir levels on rabi crop yields, even as rabi sowing levels are slightly better than previous year levels, remains a concern, it said. Nonetheless, it said, an expectation of improvement in non-farm income, supported by the government's thrust on rural spending, infrastructure creation and irrigation spending, is expected to continue to support the demand for tractors at a pan India level.

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