08pgdm061 Aditya Jcb09

2009
JCB INDIA LTD 2009
JCB INDIA LTD

Rural Market of India
Market Study and Potential States
Aditya Bikram Shah Summer Trainee, Student of PGDM (2008-10) International Management Institute New Delhi
JCB INDIA LTD
2009
Summer Project Report
JCB INDIA LTD. (Corporate Office) 23/7, Mathura Road Ballabgarh 121004 Haryana Tel: +91 129 4299000 Extn : 4030 Author of the Report: Aditya Bikram Shah PGDM 2008-10 International Management Institute, New Delhi
Project Coordinator: Mr. Puneet K Vidyarthi Dy. General Manager - Marketing
Project Objectives:
1. To understand the Rural markets of India. 2. Identify potential States for JCB to foray into.
Aditya Bikram Shah International Management Institute
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ACKNOWLEDGEMENT
With much gratitude and respect, I extend a sincere acknowledgment to Joseph C Bamford India Ltd. for letting me become a part of the Summer Training Program, for giving me the opportunity to work with their esteemed organization and for offering a project that allowed me to grow in the most holistic manner.
I am grateful towards my project mentor Mr. Puneet Kumar Vidyarthi Dy. General Manager Marketing without whom this project would not have been even close to the level at which it is today.
I really appreciate his involvement in the project and his regular advices that helped me refine the project as I went along and also inculcate all the points that help significantly with the growth in my learning.
It has been an absolute honour to have been acquainted with him and to have had the opportunity to work and learn from him.
Last but not the least; I would like to thank the HR team at JCB India Ltd for having made my tenure with the company enlightening, growth enriched, comfortable and memorable.
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Table of Contents
1.ACKNOWLEDGEMENT ....................3 2.EXECUTIVE SUMMARY ..7 3.ORGANIZATIONAL PROFILE. ..8 3.1.PROMOTERS..10 3.2. MISSION...11 4. REASEARCH METHODOLOGY..................13 5. CONSTRUCTION MARKET OF INDIA.13 5.1. SWOT ANALYSIS.....................13 5.2. SECTOR BREAKUP.14 5.3. MAJOR PLAYERS AND MARKET SHARE 2008.................15 5.4. EARTHMOVING SECTOR ...................17 5.5. GOVERNMENT INITIATIVES..19 6. INDIA AN OVERVIEW ..20 6.1. RURAL SEGMENT.20 6.2.POPULATION.................21 6.3. OCCUPATION....22 6.4. RURAL CONSUMPTION GROWTH .22 6,5, POVERTY : AN AREA OF CONCERN................24 6.6. DIVERSIFICATION OF THE RURAL ECONOMY.................24 6.7. RURAL ASPIRERS : THE FUTURE GROWTH DRIVERS .25 6.8. PARAMETERS FOR CONSUMPTION CAPABILITIES.................26 6.8.1 TRACTOR OWNERSHIP....26 6.8.2 ELECTRICITY CONSUMPTION..................27 6.8.3 ELECTRIC PUMPS, DISEAL ENGINES AND GENERATORS..29 6.8.4 IN HOUSE BATHING FACILITY30 6.8.5 OCCUPATION WISE.30 6.8.5.1 OWNER FARMER .....31 6.8.5.2 LEASED FARMER.32
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6.8.5.3 AGRICULTURAL WOKERS33 6.8.6. INCOME WISE ..34 6.8.6.1 INCOME RANGE RS. 501 -600 .34 6.8.6.2 INCOME RANGE RS. 5001 -6000 .35 6.8.6.3 INCOMR RANGE RS. 40001 RS. 60000..36 7. STATEWISE HUMAN DEVELOPMENT INDEX.....................36 8. AGRICULTURE AN OVERVIEW.......................38 8.1 AGRICULTURE EVOLUTION....40 8.2 AGRICULTURE GROWTH....41 8.3AGRICULTURAL DIVERSIFICATION TO HIGH VALUE ADDED FARM ACTIVITIES.....................42 8.4 IRRIGATION...................43 8.5CROP COVARAGE..44 8.6 AGRICULTURE PROSPECTS.................46 . 8.7 GOVERNMENT INITIATIVES...............47 9. THE RURAL CREDIT SYSTEM..............48 9.1 CREDIT CONSTRAINTS...........48 9.2 MICRO FINANCE : A RURAL INITIATIVE.....................49 9.3 THE KISAN CREDIT CARD.....................50 9.4 BORROWING AND SAVING HABITS OF THE RURAL CONSUMER.....................50 9.5 VARIOUS SOURCES OF SAVINGS.....51 9.6 SAVINGS ON THE BASIS OF MONTHLY HOUSEHOLD INCOME AND OCCUPATION.................51 10. MARKETING AND DISTRIBUTION..52 10.1. FEATURES OF INDIAN RURAL MARKETS........52 10.2 PROFILE OF A RURAL CONSUMERS..53 10.3 4AS OF THE RURAL MARKET.54 10.4 MARKETING CONSTRAINTS.........54 10.5 MARKET ACCESSIBILITY.....55
10. 6 THE CONCEPT OF HAATS AND MANDIS...................56 11. THE BUYING BEHAVIOUR OF THE RURAL CONSUMER.........................58
11.1CONSUMPTION INFLUENCES ........59
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11.2 ROLE OF OPINION LEADERS.60 12. INDIAN AGRICULTURAL EQUIPMENT INDUSTRY62 12.1 AN OVERVIEW.............62 12.2 SWOT ANALYSIS63 12.3 EVOLUTION IN FARM PRACTICES..64 12.4 MECHANISATION AN ESSENCE...........64 12.5 STATUS OF FARM MECHANISATION IN INDIA...66 12.6 BENEFITS OF MECHANISATION..66 12.7 AVAILABILITY OF TOOLS....67 12.8 AGRICULTURAL EQUIPMENT.68 12.8.1 TRACTORS68 12.8.2 FACTORS FOR PURCHASING A TRACTOR...70 12.8.3 THE ECONOMIC IMPACT OF A TRACTOR ...........71 12.8.4 MAJOR PLAYERS.............71 12.8.5 OTHER AGRICULTURAL EQUIPMENT....73 12.9 GOVERNMENT SUBSIDIES74 13. GOVERNMENT PROGRAMS FOR RURAL UPLIFTMENT.......78 13.1 BHARAT NIRMAN....78 13.2 PRADHAN MANTRI GRAM SADAK YOJANA.................78 13.3 NATIONAL RURAL EMPLOYMENT GUARANTEE ACT (NREGA).........79 13.4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)......79 13.5 INDIRA AWAAS YOJANA (IAY)...........79 14. RECOMMENDED STATES............82 14.1 ANDHRA PRADESH..........82 14.2 SWAT ANALYSIS..............82 14. 3 GUJARAT....................85
14.4 SWOT ANALYSIS....85

14.5 TAMIL NADU...87 14.6 SWOT ANALYSIS....87 15. BIBLOGRAPHY...92
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2.EXECUTIVE SUMMARY
The report was prepared with the prime motive of understanding the rural sector of India and the feasibility of JCB to foray into this untapped market Objective: To understand the feasibility of JCB to foraay into the rural markets of India.
The Indian Construction Equipment sector has an estimated market size of US$ 2.4 2.6 billion for the year 2007. The construction sector in India has been growing at a scorching pace of over 30 per cent annually, driven by the huge investments being made by the government and the private sector in infrastructure development. With Prime Minister Manmohan Singh projecting investments of $320 billion in the infrastructure sector over the next few years, prospects for the construction equipment industry appear to be dazzling. This sector is primarily driven b investments made by the government, through internal accruals and external borrowings, or by private enterprises through the PPP (public-private partnership) model and/or as an investment (in power, ports, bridges, toll ways, etc.).
A secondary marketing research has been performed to understand the evolving needs of thr rural sector of India keeping in mind JCB INDIA LTD intentions of finding a potential market to seel their new product. The research has been conducted by referring to websites, books, journals and other research reports. Further a trip to a town Biwadi in the district of Alwar, Rajasthan was made to understand the changing needs of the rural consumers on account fo rapid development activities undertaken by the government in areas of housing, roads and industries. There has been a rapid change in terms of occupation as many farmers are converting into contractors and demanding construction equipments so as to partipate in the development process and earn better income. The conclusions drawn during the research helps in devising recommendations for the company in terms of entering the potential States of India.
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3.ORGANIZATIONAL PROFILE
Joseph C Bamford (JCB)
In every corner of the world you'll find a JCB machine. JCB is one of the world's top three manufacturers of construction equipment. They employ around 7000 people on 4 continents and sell products in 150 countries through 1,500 dealer depot locations. Throughout 64 year history, they have always invested heavily in research and development, keeping JCB at the cutting edge of innovation. Today, JCB has some of the finest engineering facilities across the globe, produces a range of over 300 machines and maintains a reputation for unrivalled customer service.
JCB setup a presence in India in 1979 with a 80:20 JV with Escorts, and has invested US$ 125 million in the country. They are one of the largest construction equipment manufacturers in India. JCB India is a part of the world renowned and legendary company J C Bamford Excavators Limited (JCB), one of the prominent players in the construction equipment industry and amongst the 3 largest players in the world, producing over 300 different models, which are sold in over 150 countries. The company has a turnover of US$ 335 million. The company is growing by between 25-30 per cent annually. JCB India is a subsidiary of prominent global player J C Bamford Excavators Ltd. (JCB). The product ranges from Backhoe loaders, wheeled loaders to excavators and skid steer loaders.
They have 70 per cent market share in the backhoe loader segment and around 13 per cent market share in overall Indian construction equipment industry. JCBs customers are mostly hirers and large and small contractors. They have facilities at Ballabgarh in Haryana & Pune in Maharastra. They have a very good distribution network. They have 48 dealers and 300 outlets. They have dedicated parts center in Ballabgarh and parts distribution depots in Chennai, Pune and Kolkatta.
They are setting up a new facility in Pune with a capacity of 8000 units. The company has plans of going aggressive on excavators and compactors. They shall achieve the same with their new excavator production unit with an installed capacity of 6000 units. The company wants to make India an export hub to cater to the Middle
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East & South East Asian regions. It has sold more than 75,000 machines in India, with one out of every two construction machines sold in the country being made by JCB. JCB is the pioneer in this field and has been recording excellent growth rates. From nine dealers and 12 outlets in 1987 to 48 dealers and over 300 outlets in 2008, throughout the country along with a world-class customer service network support, JCB has come a long way. In 2007, JCB India achieved the landmark by being the first construction equipment manufacturer in India to cross the 50,000 machine sales mark. JCB India has got a wide range that includes, excavators loaders, frontend loaders, articulated loading shovels, tracked excavators, tele-handlers, vibratory compactors and skid steers. In all, JCB India has got 21 models. JCB machines are of best standards and also meet Bharat Stage II requirements.
The company is all set to tap the new market with its new offferings the identity of which is still not disclosed. The report provides a brief of the rural India with some parameters taken into consideration to arrive at a conclusion about the poetntiality of the sector. A secondary reseach has been followed so as to provide insights of the overall prospects of Rural India. Product Range: Backhoe Looaders, Excavators, Wheeled Loaders, Vibratory Single drum Compactors, Skid steer Loaders, Telescopic Handlers, Generators.
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JCB INDIA LTD 3.1.PROMOTERS
2009
The founder Late Mr. Joseph C Bamford believed in delivering innovative, strong and high performance
products and solutions to customers. He felt that the needd to initiate anything requires a need for urgency to do something from within.
The company is managed by Mr. Anthony C Bamford who is the chairman.
The Indian operations are managed by MD Mr. Vipin Sondhi.
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JCB INDIA LTD 3.2. MISSION
2009
The mission is to grow the company by providing innovative, strong and high performance products and solutions to meet our global customers' needs
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PART B RESEARCH METHODOLOGY

The objective of the study was to study the rural segment of India and the feasibility of JCB India to foryay into this segment. In this highly fragmented market with increasing competition form rivals such as BEML, L&T Komatsu,Caterpillar, Telcon it has become essential for the company to look for new areas to tap the otherwise untapped potential markets of India. India has become a favorable destionation for such players owing to the amount of investment the government had proposed towards the infrasture development. Further the rural segment is the hot destinations owing to the rising income levels and governments continued initiatives for development.
METHOD OF DATA COLLECTION

The secondary data was collected from books, journals, magazines, websites realted to rural India. Further reasearch reports of FICCI, MGI Consumer Demand Model and MART were used as references. Further visits to sample towns such as Biwadi, Alwar - Rajasthan; Alwar places of mass development in terms of industires and housing gave a good understanding as to how farmers whos land values have risen owing to development are diversifying into the construction business as contractors owing to which demand for construction equipment is increasing.
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5. INDIAN CONSTRUCTION EQUIPMENT
The Indian Construction Equipment sector has an estimated market size of US$ 2.4 2.6 billion for the year 2007. The industry has been growing due to the large investments made by the Government and the private sector infrastructure developments. The prospects of the construction equipment industry look attractive with a projected investment of US$ 320 billion in the infrastructure sector over the next few years. Though the Indian construction equipment industry is a fraction of the global market, whose size is over US$ 75 billion, it has been growing at an average of 30 per cent annually compared to the global growth of 5 per cent.
5.1 SWOT ANALYSIS
Strength: Construction Equipment sector is estimated at USD$ 2.25 billion in 2006 and is growing at 25% per annum against 5% per annum of global market. Indian market is estimated to be USD$ 4 billon by 2010. The vast talent pool gives India a comparative advantage, with high quality of engineering, software and IT talent. Indias labor cost per hour is amongst lowest compare to other developing countries.
Weakness: Weak organized market currently. It is necessary to have a strong organized market for the industry to grow fast, because it offers substantial benefits. It will allow customers to upgrade to newer, more sophisticated equipment faster, and also help players to retain customers. To develop India as a major manufacturing hub it is necessary to focus on R & D. But in the case of construction equipment the focus on R & D is less compare to the global counter parts. With few exceptions, technology is imported from global partner or parent companies, rather than developing it indigenously here. Opportunities: Many global companies have brought in world-class technology, processes and systems. Few big name s like JCB, Ingersoll Rand, Komastu, Caterpillar have there presence in India. With Indias talent pool of skilled labor,
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adequate R & D, low cost of labor India has the potential to manufacture similar equipments at a much lower cost. Threats: Unorganized segment is estimated to be at 16-18% which varies across different equipment categories. High end equipments are manufactured by organized players with large R & D facilities. Hence, unorganized sector does not pose a big threat. Government have drawn robust plan for infrastructure development but still poor quality of existing infrastructure acts as a bottle neck as significant resource is utilized for its repairs and maintenance. This acts as a hurdle for implementation of new projects, which also hampers the overall economic development of the economy and the sector. The following is the sector breakup of the construction equipment industry in India as of 2004. Product consumption constitutes the bulk of the segment with around 56 per cent while the unorganised sector contributes to around 15 per cent. Unorganised players are more prevalent in the relatively less technology intensive material handling, material preparation and concrete equipment segments.
Sector Break Up
2% 6% 15% Spare Parts 56% 21% Unorganized Sector Products
Services
Exports
www.ibef.org
Spare parts revenues range anywhere from 2029 per cent of the total sales for representative companies and are predominant in tunneling and drilling equipments. Services revenues have been higher for global players at around 1120 per cent in comparison to 28 per cent of Indian players.
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5.3 MAJOR PLAYERS AND MARKET SHARE 2007: The construction equipment industry in India has more than 200 players; however, the top 6 players occupy about 60 per cent of the market. The following are players and their contribution to the Indian construction equipment industry
Company
Revenue
Market Share
JCB India
329
13.2%
BEML
307
12.3%
TELCON
283
11.3%
L&T Komatsu
156
6.3%
Caterpillar
143
5.7%
Ingersol Rand
105
4.2%
Volvo
99
3.9%
ECEL
61
2.4%
Greaves Cotton
37
1.5%
ACE Ltd
36
1.5%
Others
944
37.7%
Total Market
2500
100.0%
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The construction equipment industry is primarily driven by three key sectors: Construction : Clocked a growth of 10.1% in the year 2008 but owing to a slowdown it has been reported a growth of 6.1% in Q3FY09. Mining and Quarrying: Grew at a rate of 3.3% in 2008 and currently has a GDP growth rate of 5.3% in Q3FY09. Manufacturing: Reported a GDP growth rate of 10.1% in the year 2008 and has reported a negative growth rate of -0.2% in Q3FY09. Further the consruction equipment industry is further divided into : Earthmoving equipment Road construction equipment Material handling equipment Tunneling and Drilling equipment Construction vehicles
The report takes part of the Earthmoving segment market.
Sector
Contribution
Earth Moving Equipment Material Handling Tunneling & Drilling for Mining Road Construction Equipment Concrete Equipment Concrete Preparation
51% 13% 12% 7% 6% 5%
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5.4 EARTHMOVING SECTOR
2009
The earthmoving equipment market in India is estimated at about US$ 1.4 billion. The predominant subsegment in this is excavators, which account for just over half the market. Backhoes account for 26 per cent and loaders for another 5 per cent share.
Total Market Size - US $ 1.4 Billion

Excavators Backhoes Loaders Others
www.ibef.org
EXCAVATORS:
The excavator market in India was around US$ 733 million in FY06 with a total of about 4455 units being sold. Sizeable market for used equipment as well. Excavators have registered a 30 per cent CAGR. Projected growth by 2012 is a whopping 40,000 units. High end excavators incorporating modern technology are witnessing faster growth compared to the traditional low end excavators 618 tonne excavators have grown at a CAGR of 9 per cent while 1822 tonne excavators have registered a growth of 23 per cent CAGR during the period of FY01-06. 22-50 tonnes excavators have seen a CAGR of 35 per cent and over 50 tonnes have registered 19 per cent CAGR in the same period. Key players in this sector are Telcon, L&T - Komatsu, Volvo, CAT and JCB. Telcon is the market leader with about 50 per cent of the market
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12000 10000 8000 6303 6000 4000 2000 0 2002 -03 2003 -04 2004 -05 2005 -06 3725 4300
CAGR 37%
2009
9590
Sales (Units)
www.ibef.org
BACKHOE LOADER:
India is the second largest market for backhoe loaders in the world with a market size of approximately US$ 358 million. The market has been growing at a rate of close to 37 per cent CAGR over last four years. JCB India is the leader in this segment with a share of over 70 per cent. Key drivers for this market have been the housing and urban construction. Other players include Telcon, L&T, Caterpillar and Terex
Sales (Units)
1600 1400 1200 1000 800 600 400 200 0 2002- 03 2003 -04 2004 -05 2005 -06 Sales (Units) Poly. (Sales (Units))
CAGR 41%
www.ibef.org
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Backhoe loader application: Used for uploading materials into trucks, laying pipes, clearing rubble, and digging.
2009
The total market for wheeled loaders was approximately US$ 64 million in FY06 with a total of about 1321 units being sold.
Growing at a CAGR of about 41 per cent over the last 4 years. The growth is expected to continue at10 per cent CAGR over the next few years.
Key players in the Loaders market are Caterpillar (~50 per cent share), JCB and Telcon with L&T Komatsu and Volvo being players with a relatively smaller presence.
5.5 GOVERNMENT POLICY: The Government of Indias focus on infrastructure development is the single biggest driver for the construction equipment industry. Policies that encourage manufacturing and retail activity also have a positive impact on the equipment market. Apart from these, some of the policies that are aimed at attracting investment in the sector include the following:
All agencies and ministries of union and state government will work united with a shared vision for success.
100 per cent FDI is allowed for manufacturing purposes. Exemption from obtaining an industrial license to manufacture. Manufacturers are free to select the location of the project. Import duties reduced to encourage imports. Encourage exports from Export Oriented Units (EOUs), Special Economic Zones and Export Processing Units (EPUs).
Locations with high growth potential to be supported by Government to bridge technology and productivity gaps. skill up-gradation, physical infrastructure, environmental mitigations facilities to be provided by Government in selected areas of intervention.
Schemes similar to SEZs can be developed for export oriented units with capital investment in plant and machinery over US$ 6 million.
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6. INDIA - A GENERAL OVERVIEW:

INDIA is one of the oldest civilisations in the world with a kaleidoscopic variety and rich cultural heritage. It has achieved all-round socio-economic progress during the last 61 years of its Independence. India has become self-sufficient in agricultural production and is now the tenth industrialised country in the world and the sixth nation to have gone into outer space to conquer nature for the benefit of the people. It covers an area of 32,87,2631 sq km, extending from the snow-covered Himalayan heights to the tropical rain forests of the south. As the 7th largest country in the world, India stands apart from the rest of Asia, marked off as it is by mountains and the sea, which give the country a distinct geographical entity. Bounded by the Great Himalayas in the north, it stretches southwards and at the Tropic of Cancer, tapers off into the Indian Ocean between the Bay of Bengal on the east and the Arabian Sea on the west.
Lying entirely in the northern hemisphere, the mainland extends between latitudes 84' and 376' north, longitudes 687' and 9725' east and measures about 3,214 km from north to south between the extreme latitudes and about 2,933 km from east to west between the extreme longitudes. It has a land frontier of about 15,200 km. The total length of the coastline of the mainland, Lakshadweep Islands and Andaman & Nicobar Islands is 7,516.6 km.
6.1 THE RURAL SEGMENT The Census defines urban India as - "All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board etc or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square kilometer. India is a land of diversity and about 70% of the Indian population lives in villages. These villages contribute in the economic development of the nation through the production of food grains, vegetables, fruits, etc. Export of these agricultural commodities result in the generation of capital and earnings of foreign exchange.
There are 600,000 villages in India. 25% of all villages account for 65% of the total rural population. So we can contact 65% of 680 million or 700 million population by simply contacting 150000 villages which shows the huge potential of this market. The overall population in rural India is highly scatterd with about 25% of the rural
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population residing in cvillages which have 501 -1000 population size. This creates problems for major companies to foray into such areas as cost of logistices and the market does not allow them to. Further villages with population above 1000 comprises of about 30% which again is highly scattered and owing ttto which major FMCG comapines have to resort to innovative ways to reach such areas. One of the most prominent examples being HUL Project Shakti and ITC e choupal.
Inhabited villages classified by population size, 1991 and 2001 Villages in size group (1991) Number Less than 200 201 -500 501 1000 1001 2000 2001 5000 5000+ Total 103952 141143 144998 114395 62915 13376 580779 Per Cent 17.9 24.3 25 19.7 10.8 2.3 100.0 Villages in size group (2001) Number 92541 127054 144817 129662 80313 18758 593154 Per Cent 15.6 21.4 24.4 21.9 13.5 3.2 100.0
Source: Census 1991 & 2001
6.2. POPULATION: With the rate of urbansiation superseding the rural growth it is predicted that rural population will constitue 33.67% and rural 66 % and will continue to be vital for the overall eonomy. Sex ratio, defined as the number of females per thousand males is an important social indicator to measure the extent of prevailing equality between males and females in a society at a given point of time. The sex ratio in the country had always remained unfavourable to females. However with the increase of literacy rate and the concept of nuclear families in the rural segment, the women have been equal partners in overall decision making process.
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JCB INDIA LTD Year Projected Population (in thousands) Persons 1996 2001 2006 2011 2016 934218 1012386 1094126 1178889 1263543 Males 484859 523780 564498 606744 648886 Females 449360 488606 529628 572145 614657 22.73 28.77 30.35 31.99 33.67 Urban Population%
2009
%Rural Population
72.27 71.23 69.65 68.01 66.33
Source: Census of India 2001
6.3 OCCUPATION: By further segmenting the rural population by occupation , it was found as per the NCAER 2002 that Cultivators and wage earners comprised the largest segment with figures such as 40.86% and 35.28%. The demographic profile in this segment naturally affects the buying behaviour. The wage earner and salary earner cannot behave in the same manner. The cultivators income is seasonal with more disposal income available fater the harvesting season. A shift in occuptaion pattern is seen during the off season times when majority of the working class - labourers will shift to urban places or governments works in their villages to earn additioanl income.
Distribution of Households by occupation of the Heads, 1999 -2000 Heads Occupation Distribution of Households (%) Urban Rural All Housewife 0.84 1.01 0.96 Cultivators 3.45 40.86 29.99 Wage Earners 20.93 35.28 31.12 Salary Earners 40.72 11.28 19.84 Professional 3.59 0.73 1.56 Artisans 6.90 3.41 4.42 Petty Shopkeers 16.05 4.47 8.19 Businessman 3.68 0.46 1.40 Others 3.85 1.98 2.52 Total 100 100 100 Source: NCAER 2002
6.4 RURAL CONSUMPTION GROWTH The rural consumption rate will continue to lag behind the urban counterparts but will accelerate from a compounded rate of 3.9% to 5.1% during the next two decades. By the end of the forecast the rural consumption
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rate would have nearly trebled and will have created a large potential market of about 26 trillion Indian rupees ($577 billion). In comparision, Indian rural markets will be larger than the total consumer markets in South Korea or Canada today and almost the four time size of Indian urban Market.
Rural India will see a growth in the consumption rate on a per household basis and at present the consumption rate lag behind that of the urban consumption rate. However as per MGI prediction the rural consumption rate will reach equilavent to that of the urban by the year 2017 provided the consumption rate grows at a constant rate of 5.1% and Indian GDP continues yto grow at rate of 8% per annum
The World Bank estimates that 456 million Indians (42% of the total Indian population) now live under the global poverty line of $1.25 per day (PPP). This means that a third of the global poor now reside in India. However, this also represents a significant decline in poverty from 60 percent in 1981 to 42 percent in 2005, although the rupee has decreased in value since then, while the official standard of 538/356 rupees per month has remained the same.
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6.5 POVERTY AN AREA OF CONCERN Indias national definition for poverty is based on calorific consumption, which sets at 2400 calories per capita per day for rural inhabitants. In 2001 29 percent of the population was considered living below the
poverty line and a risk of malnourishment. However owing to Indian economy overall progressment and an increase in the income of the rural population and also from owing to diversification from agro to non agro services, it is predicted that the size of the deprived class who earn a minimal, will decline from 65 percent of the population to 29% of the rural population.
With the population growing at the rate of 116 million over the next twenty years and is predicted that there will be 325 million fewer rural poor by 2025 which means a masive increase in overall consuption power of the rural class. 6.6 DIVERSIFICATION OF RURAL INDIA As per the data of NSSO, the overall proportion of male population employed in the agricultural sector has dcreased from 75% to 69% . There has been a substantial increase in the workforce of the service sector such as construction, trade, hotels, transport, storage and communication. The manufacturing sector in rual araes such as food processing companies and other agri processing manufacturers have also taken a large chunk of rural agricultural labourers for their day to day working. This has been a good factor for such people as their disposal income has increased owing to good salaries and provison provided by their employers.
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6.7 RURAL ASPIRERS: THE FUTURE GROWTH DRIVERS The overall average income of the rural household as predicted by the NSSO will increase by 3.65 over the next 20 years, 0.8 percent faster than the previous 20 years. The pace of growth will be sufficient enough to trigger a shft from the Deprived to the aspirers as shown below in the diagram. The aspirers will constitute 47% of the population by the year 2015 and will constitute 55% of the overall spending. By the year 2025, the seekers which will constitue the lower middle class will constitue a fifth of the rural pupulation which will spend a substantial amount of their income on discretionary product and services. As the income increase, the businesses will still face the problem of extremely low per household income spending. Also the fact that the aspirers and seekers will be higy dispersed all across the nation which will require thorough understanding of the highly fragmented market and varied household and product needs.
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6.8 PARAMETERS FOR CONSUMPTION CAPABILITIES: The obejective here was to determine the statewise potetntial in terms of rural segment for JCB to foray into with its new product yet to be disclosed by the company. The research concept is based on Marketing White Book 2007 - 2008 findings. The parameters here determine the income, housing and occupation of the targeted segment and eventually their consumption pattern which will also help in understanding the profile of the all the parameters is 55,41,35,000 which cover all the states of India. targeted rural consumers and the possibility to lauch the product in such a market. 6.8.1 TRACTOR OWNERSHIP:
AP Assam Bihar Jharkhand Goa Gujarat Haryana HP Karnataka kerala MP Chattisgarh Maharasthtra Orrisa Punjab Rajastahn Tamil Nadu UP
Tractor Ownership
2.9% U.P. 29.2% 5.3% 4.6% 7.2%
11.2% 2.8%
Rajasthan
14.5%
6.5% 5.2% Punjab
Source: Marketing Whitebook 2007 -08.
Established individuals: 55,41,35,000 Individuals: 1,10,90,000 Higher Availability: Punjab: 12.4% UP: 3.4% Haryana : 6.8% Rajasthan: 3.8% The Indian tractor industry is the largest in the world accountuing for one third of the world production. In the long term the industry is expected to grow at a rate of 5to 7 percent largely due to the thrust by the government
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to increase agriculture GDP. 93 percent of the tractor industry is concentrated in twelve states namely Andhra Pradesh, Bihar, Gujarat, Haryana, Punjab, Orissa, Tamil Nadu, Karnataka, Maharsahtra, Uttar Pradesh, Madhya Pradesh and Rajsathan. Uttar Pradesh is the largest tractor market with 44, 308 units sold in 2006-07. Tractor sales in Maharashtra, Karnataka, Tamil Nadu and Gujarat have shown a tremendous growth in the 2005 -06 percent of about 63 %, 54%, 47 %. A high level of tractor ownership was observed in Uttar pradesh, Rajasthan Punjab and Maharashtra. However owing to heavy subsidies and encouragement to the farmers the government of Andhra Pradesh has been encouraging farmeres to improve their agricultural output by using agricultural machines like tractors, cultivators, etc. 6.8.2 ELECTRICITY CONSUMPTION:
AP Assam Bihar Jharkhand Goa Gujarat Haryana HP Karnataka kerala MP Chattisgarh Maharasthtra Orrisa Punjab Rajastahn Tamil Nadu
Electricty Availability
9.8% 8.1% 5.1% 7.8% 10.1% 7.1% 5.3% 6.2% 11.8%
A.P.
6.6%
U.P.
Maharashtra
Established Individuals: 55,41,35,000 Individuals: 31,92,58,000 Higher availability of electricity: AP: 85% Maharashtra: 72% Tamil Nadu: 88.2% UP: 32.7% Uttaranchal : 77.7% Rajasthan: 51%
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The National Electricity Policy envisages that the per capita availability of electricity will be increased to over 1000 units by 2012. The per capita consumption of power in the country in 2005-06 as calculated by the Central Electricity Authority has been about 631 Kilowatt Hours. Some of the states identified wherein per capita consumption of electricity was hich were: Haryana 1090 Punajb 1436 Gujarat 1283 Goa - 1970 Andhra Pradesh 723 Uttar Pradesh 311 Rajasthan 572 Maharasthra 934 However electricity availability in rural sector was prevalent on the higher side in states like Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu and Uttar pradesh as per the MGI India consumer demand survey. The usage of electricity in households and farms are signs of progressment and better standard of living .
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6.8.3 DISEAL, ELECTRIC AND GENERATORS SETS
Diseal Pump Availability - Units - 2003

TN
1178 5633 6214
Bihar
4244 2670 1090 4255
U.P
27641 8403
1156 2480
Rajasthan
www.indiastat.com
2284
Andhra Pradesh Bihar Chattisgarh Gujarat Haryana Jharkhand Karnataka Kerela MP Maharashtra Orrisa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal
The usage of generator sets and pumpsets diseal engines and electric pumps again shows the level of mechanisation in the rural sector of India. Electric Motors and Diesel Engines are the primary sources of stationary power for irrigation, threshing and various post-harvest agro-processing operations. Diesel Engine population, which was 1.443 million in 1971-72 increased to 5.528 in 1995-96, and, crossed 7.4 million in 2005-06. Electric Motor population has increased from 1.535 million in 1971-72 to 7.464 million in 1995-96, and, was 12 million 2005-06. The usage of diseal pumps was highly prevalent in states like U.P, Rajsathan, Bihar and Tamil Nadu as shown below.
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6.8.4 IN HOUSE BATHING FACILITY:
In House Bathing Facility

A.P.
9.4% 8.8% 3.9% 10.4% 4.8% 5.7% 15.8% 12.6% 5.8% 5.1% 3.7%
Maharashtra Karnataka
AP Assam Bihar Jharkhand Goa Gujarat Haryana HP Karnataka kerala MP Chattisgarh Maharasthtra Orrisa
Established individuals: 55,41,35,000 Individuals: 15,13,98,000 Highest availability: Haryana: 48% Punjab: 55% Tamil Nadu: 45% Karnataka: 86% The prevalence of ingouse bathing facility in rural areas is again a sign of progressement a large section of the poulation in this deprived of it. As per the MGI Consumer Demand Model states like Andhra Pradesh, Karnataka, and Maharashtra had large households with provisions of inhouse bathing facility. The prosperity factor seems to be on ahigher side in such states but can owing to a highly fragmented rural population and diverse cultures and beliefs this parameter may not be that useful. 6.8.5 OCCUPTAION WISE: The rural segement of India is highly involved in agricultural activity but is supplemented with animal husbandry and rearing livestock. India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing accounted for 16.6% of the GDP in 2007, employed 60% of the total
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workforce and despite a steady decline of its share in the GDP, is still the largest economic sector and plays a significant role in the overall socio-economic development of India. The highest paid occupation for men in rural India is masonry among seven non-agricultural occupations. 6.8.5.1 OWNER FARMERS:
Owner Farmer
4.3% 5.5%
U.P
18.8% 3.4% 9.0% Rajasthan 10.6% Orissa 3.8% Maharashtra
8.8%
3.4% 4.2% 13.8%
4.8% M.P.
Source: Marketing Whitebook 2008 - 09
Established individuals: 55,41,35,000 Individuals: 9,60,56,000 Highest numbers: Rajasthan: 27% Maharashtra: 23% M.P. : 39.9% UP: 18.9% As per the MGI India Consumer Demand Model Uttar Pradesh, Maharashtra and Madhya Pradesh have a huge number of farmers who own and till their own land and this also explains the high sale of tractors and agricultural equipment in theses states. Uttar Pradesh has around 18.8% of farmers who own lands ranging from 1 acre to about 18 acres as per the ceiling limit.
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6.8.5.2 LEASED FARMERS:
Leased Farmers
U.P
8.7% 16.8% 37.2% 10.0%
Bihar
3.5%
Orissa
3.5%
4.8%
3.7%
Source: Marketing Whitebook 2008 - 09.
AP Assam Bihar Jharkhand Goa Gujarat Haryana HP Karnataka kerala MP Chattisgarh Maharasthtra Orrisa Punjab Rajastahn Tamil Nadu UP Uttranchal
Established Individuals: 55,41,35,000 Individuals: 10344000 Highest Numbers: Bihar: 7.1% Orissa: 4.2% UP: 1.8% The concept of leased farming is highly prevalent in Bihar with about 37% of the farmers engaged in this business. The lease period may range from 1 year to over 5 years wherein the tenant tills and harvest the land and gives the lease payment depending upo the going rate per acre in advance. This gives the leased farmer an incentive to invest in agricultyural tools and implements owing to the security of managing the land for a fixed duration of time. The concept is catching up in Uttar Pradesh with over 16.8% of the farmers resorting to takin lands on lease.
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6.8.5.3. AGRICULTURAL WORKERS:
Agricultural Worker
7.7% 8.1%
7.2%
A.P. 16.9% 10.8%
12.1% Maharashtra 2.9% 10.2% 11.2%
5.9% 1.9%
M Source: Marketing Whitebook 2007 -08. .P Source: MGI India Consumer Demand Model. .
Karnataka
AP Assam Bihar Jharkhand Goa Gujarat Haryana HP Karnataka kerala MP Chattisgarh Maharasthtra Orrisa Punjab Rajastahn Tamil Nadu UP Uttranchal West Bengal
Established Individuals: 55,41,35,000 Individuals: 10344000 Highest Numbers: Bihar: 7.1% Orissa: 4.2% UP: 1.8% Agricultural labourers are the most important assets for the farmers as the overall survival of the farm depends upon them. They are the bread and butter for the owners and the overall productivity of the farmland depends is connected with them. However owing to better avenues offered in nearby towns and metro cities a huge number of these flock to such places to earn a better standard of living which is a major concern for todays farmers. As per the MGI India Consumer Demand Model Andhra Praesh has a highest number of agricultural workers employed with the figure being 16.9 % followed by Karnataka -11.2%, Maharashtra - 12.1%, Bihar 10.8%.
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6.8.6 INCOME BASIS: INCOME RANGE: RS. 500 1000

AP Assam Bihar Jharkhand Goa Gujarat Haryana HP Karnataka kerala MP Chattisgarh Maharasthtra Orrisa Punjab Rajastahn Tamil Nadu UP Uttranchal West Bengal
Rs. 500 - 1001

6.7% 20.1% 1.2% 10.0% 9.4% 4.3% 5.5% 6.7% 6.5% 8.7% 6.9% 2.7% 1.4% 3.7%
2.8% Source: MGI India Consumer Demand Model.
Karnata ka
Established Individuals: 55,41,35,000 Individuals: 2,76,02,000 Highest Numbers: AP: 6% Bihar: 4% Maharashtra: 8% Rajasthan: 2% UP: 4% Punjab: 0.6% The income level of the rural population was highly inconsistent depending upom the kind of profession these people are into. It was observed that Uttar Pradesh and Andhra Pradesh has a large number of rural population who live below the poverty line with their yearly income ranging from a mere Rs. 6000 to 12000. This number also include a high prevalance of child labour who get under paid for the same amount of work done by them either in agricultural or in other non agricultural allied serives
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6.8.6.1 INCOME RANGE RS. 5001 6000 P.M.:
Rs. 5001 - 6000

3.1% 7.5%
U.P
3.9% 8.3% 9.8%

Bihar
15.0%
2.9% 5.9% 6.1%

Punjab
7.3%
5.8% 3.2% 4.6%
AP Assam Bihar Jharkhand Goa Gujarat Haryana HP Karnataka kerala MP Chattisgarh Maharasthtra Orrisa Punjab Rajastahn Tamil Nadu UP Uttranchal
Established Individuals: 55,41,35,000 Individuals: 12271000 Highest Numbers: Bihar: 5.8% Maharashtra: 1.7% Punjab: 6% UP: 2% Rajasthan: 2% States like Uttar Pradesh, Punjab, Bihar showed people earning an income of Rs. 60000 to Rs. 72000 per year which showed that a large number of people owned small size holdings and were also involved in other agricultural and non agricultural allied services. The average going rate in the states for an agricultural labourer ranges between Rs. 80 to Rs. 150 per day which comes to about Rs. 4500 per month. The figures below quote a higher amount which shows that the probality of an individual involved in other areas is high.
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6.8.5.3 INCOME RANGE RS. 40001 - 60000
2009
Rs. 40001 - 60000

1.3%
U.P
Bihar
11.7% 7.8% 9.1%
24.7%
15.6%
10.4%
Maharashtra
Rajasthan
9.1%
10.4%
Source: MGI India Consumer Demand Model.
Orissa
Established Individuals: 55, 41, 35000 Individuals: 77,000 This set of people are either large farm holders or are self employed dealing with agricultural and non agricultural services such as food processing, trading, contractors, shop keepers. Uttar Pradesh, Maharsahtra, Punjab, Rajsathan are some key states where there is a section of rural poputaion which are affluent and have a high disposal income. These are considered to be in the top income bracket and are the affluent lot.
7. STATEWISE HUMAN DEVELPOMENT INDEX: The HDI combines normalized measures of life expectancy, literacy, educational attainment, and GDP per capita for countries worldwide. It is claimed as a standard means of measuring human developmenta concept that, according to the United Nations Development Program (UNDP), refers to the process of widening the options of persons, giving them greater opportunities for education, health care, income, employment, etc. The basic use of HDI is to measure a country's development. As per the www.indiastat.com Kerela, Punajb, Maharasthtra, Gujarat, Harayana, Karnataka, Tamil Nadu are among the top seven states when it comes to eductaion, life expectancy and GDP per capita and Bihar, Uttar Pradesh and Madhya Pradesh ranked the lowest owing to large no of families and rural population living below
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the poverty line. The medical provision, health care facilities, eductaion, are on the path of improvement owing to government initiatives but still way behind other states.
(1981, 1991 & 2001) States/UTs 1981 Value Andhra Pradesh Assam Bihar Gujarat Haryana Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal India 0.298 0.272 0.237 0.36 0.36 0.346 0.5 0.245 0.363 0.267 0.411 0.256 0.343 0.255 0.305 0.302 Rank 9 10 15 4 5 6 1 14 3 11 2 12 7 13 8 1991 Value 0.377 0.348 0.308 0.431 0.443 0.412 0.591 0.328 0.452 0.345 0.475 0.347 0.466 0.314 0.404 0.381 Rank 9 10 15 6 5 7 1 13 4 12 2 11 3 14 8 2001 Value 0.416 0.386 0.367 0.479 0.509 0.478 0.638 0.394 0.523 0.404 0.537 0.424 0.531 0.388 0.472 0.472 Rank 10 14 15 6 5 7 1 12 4 11 2 9 3 13 8
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8. AGRICULTURE SECTOR OVERVIEW
As per statistical abstract India 2004, the overall land expanse of India is estimated to be around 32,87,2631 sq km with total net sown area of about 46%. Further fallow lands and permanent pastures constitute 7% and potetntial culturalable wasteland constitue 4% of the area. The overall forect coverage is 23% .
Total area expanse: 32,87,2631 sqkm
Total Area coverage
Net Sown Area Fallow land
23% 46% 14% 14% 4%
Culturable Waste Land Land Under Misc Tree Permanent Pastures
4%
Un Cultivable Current Fallows
statistical abstract india 2004
1%
3%
Forest
Agriculture is the backbone of Indian Economy. About 65% of Indian population depends directly on agriculture and it accounts for around 22% of GDP. Agriculture derives its importance from the fact that it has vital supply and demand links with the manufacturing sector. During the past five years agriculture sector has witnessed spectacular advances in the production and productivity of food grains, oilseeds, commercial crops, fruits, vegetables, food grains, poultry and dairy. India has emerged as the second largest producer of fruits and vegetables in the world in addition to being the largest overseas exporter of cashews and spices. Further, India is the highest producer of milk in the world. Today, India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing accounted for 16.6% of the GDP in 2007, employed 60% of the total workforce and despite a steady decline of its share in the GDP, is still the largest economic sector and plays a significant role in the overall socio-economic development of India.
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Forestry
Agriculture
Fishing
Farm Sector
Animal Husbandry
Horticulture
Dairy: India ranks first in the world in milk production, which was around 100 million tones in 2006-07.Strong networks of Milk Cooperatives, have been instrumental in this phenomenal performance of dairy sector in India. Presently, 1.13 lakh village level cooperative societies spread over 265 districts in the country form part of the national Milk Grid. This Grid links milk producers throughout India and consumers in 700 towns and cities. Delicensing of dairy sector in 1991 has directed considerable amount of private funds both from inside and outside country in this sector especially in manufacturing facilities while investment in cooperative sector are concentrated largely in procurement and processing of milk.
Livestock: Livestock sector contributes about 27% of the G.D.P. from agriculture and allied activities. This sector has excellent forward and backward linkages, which p-promote many industries and increase the incomes of vulnerable groups of the society such as agricultural labourers and small and marginal farmers. India possesses the second largest livestock population in the world. Production and export of poultry products have shown considerable growth in the recent decades. Export of such products to countries including Bangladesh, Srilanka, Middle East, Japan, Denmark, USA, and Angola augers well for this industry.
Fishery: Fishing, aquaculture and a host of allied activities are a source of livelihood to over 14 million people and a major source of foreign exchange earner. In 2005-06, this sector contributed about 1% of G.D.P. and 5.3%
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of G.D.P from agricultural sector.8,118 k.m. of coastline gives geographical basis for the development of marine fishery sector and cultural factor boosts the inland fishery sector in India.
According to a monthly review by the Centre for Monitoring Indian Economy (CMIE), agricultural production is likely to increase significantly and has projected a growth of 3.2 per cent during fiscal year 2009, for the GDP of agriculture and allied sectors. The allied sectors comprising livestock, forestry and logging, and fishing are likely to see a growth of 4.8 per cent during fiscal year 2009.
India is the second largest producer of both fruits and vegetables in the world and the National Horticulture Mission (NHM) aims at doubling horticulture production by 2012. Under the NHM, US$ 220.66 million has been earmarked for horticulture development during this year. The Indian state of Gujarat is striving to become a horticulture hub. With a two-fold increase in the land already allotted to horticulture, the state government now plans to bring in another 20 million hectares.
8.1. THE AGRICULTURE EVOLUTION SINCE 1891:
As ahown below agriculture sectors agriculture pre independence was a much neglected area with large holdings onk in the hands of preveleged few. Further the peope who did own small holding were subject to harsh tax regime by the Britishers. The British used India as a source of growing cotton and exporting the raw material to
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Englad for processing and importing back for sale. The food grain growth rate was dismall which was as low as 0.1% per year. India went through a huge transformation after independence between 1947 1968 which saw the abolition of zamindari Act. Agriculture sector was the biggest employer with close to 70% of the population and contributed a close to 50% to the GDP. On the event of Green revolution and financing for agriculture purpose approved by the Central Government India achieved self sufficiency in food grains between the era 1968 -1988. However with passage of time the overall contribution of agriculture to the GDP went down with other sectors such as manufacturing and services coming up.
1891 1946 Stagnation Few improvement in seeds, machines and fertilisers Food grain growth rate at 0.1% per year
1947 -1968 Land Reforms Abolition of Zamindari Act Agriculture had 70% of countrys employment Contributed 50% to GNP Central Govt provided financing for agriculture programs
1968 -1988 Green Revolution Self sufficiency in food grains Better seeds, irrigation and fertilizers Buffer stock
1988 -2006 Expanding cereal production Increase in commercial crop production Major MNCs entering Indian Market. Easy availability of finance. Aim to sustain growth of 4 -5%
8.2 AGRICULTURE GROWTH Despite the stimulus to the rural income provided by the government programmes and a steady shift towards industries and services, agriculture will continue to be a primary source of income and employement for a majority of the rural indians into the foreseeable future. The agricultural sector will see continued modest productivity gains and that value added by the agriculture sector will pick from 2.4% growth rate of the past decade to 3.1% over the next two decades.
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8.3 AGRICULTURAL DIVERSIFICATION TO HIGH VALUE ADDED FARM ACTIVITIES There is a continued shift from towards value added farm activities i.e moving from traditionalcereals and pulse crops to higher value horticulture products, dairy, and products such a honey, and even silk. Indias output of fruit and vegetables saw a rapid growth of more than 13% during 1993 to 2003with its share of total agricultural output increasing from 14 to 21 percent. Further a shift down towards agri processing value chain have brought benefits to rural areas. This can be seen in the case of Sula Vines in Nashik, Northern Maharashtra. Based on Mckinsy study about 90% of the villagers were unemployed or were subsistence farmers. With the comiong of the company about 150 of the people are employed directly, around 100 of them are into contract farming and this has also spawned ancillary industries in the surrounding villages. Average income per farm has risen by 40 %and the secondary impact has been more drammatic where 30% of the workforce are women, Local schools have been renovated and about 90% of the villages have electricity. Further with private companies making grounds in ruraol areas like ITC with their e choupal concep have made farmers better off owing to fair price for their produce which has made them better off in terms of standard of living. Further technological innovation and government initiatives such as Planning Commission s setting up
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of research institutes for seeds, irrigation have helped farmers tremendoulsy across the terrain. In the long term this will lead to better yeilds and lesser dependance on the monsoons.
8.4 IRRIGATION: Agriculture sector is the higehest consumer of water. The average annual water availability of the country is assessed as 1869 billion cubic metres (BCM). Of this, total utilizable water resource is assessed as 1123 BCM, surface water 690 BCM and ground water as 433 BCM. The irrigation potential through major, medium and minor irrigation projects has increased from 22.6 million hectares (mha) in 1951 when the process of planning began in India to about 102.77 mha at the end of tenth plan.As per the indiastat.com Punjab, UP and Haryana are better placed when it came to statewise percent coverage of irrigated area under principal crops. State-wise Percent Coverage of Irrigated Area under Principal Crops during 2005-06 (Provisional)
Percent (%)
44.9 44.2 35.0 56.3 96.6
U.P
57.0
73.1 57.5
23.9 38.0 83.7 Haryana 18.8 41.6
36.0 Punjab
30.8
www.indiastat.com
27.4 19.4
24.9 23.0 18.8
30.0
ANDHRA PRADESH ARUNACHAL PRADESH** ASSAM** BIHAR** CHHATTISGARH GOA GUJARAT** HARYANA HIMACHAL PRADESH** JAMMU & KASHMIR** JHARKHAND** KARNATAKA KERALA MADHYA PRADESH MAHARASHTRA MANIPUR MEGHALAYA MIZORAM NAGALAND ORISSA**
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8.5 CROP COVERAGE: The major crops taken here in my analysis are cash crops which are grown all acorss the Indian sun continent. These are mainly cotton, coffee, sugar cane jute, rice and wheat. Cotton: As pet the indiastat gujarat, Maharashtra and Andhra pradesh constitute about 70% of the total cotton grown in the country. The total are of production as per 2008 data was around 9.114 millim hectares. Cotton is the staple crop in these regions and constitutes a major source of livlihoods of millions of farmers in this region. India, which was having one of the lowest cotton yields in the world, has become a net cotton exporter, potentially five million bales in 2007-08, the study said. Bt cton was a major factor contributing to higher rate of production from 15.8 million bales in 2001-02 to 31 million bales in 2007-08. The income of growers in India has also increased up to Rs 10,000 or more per hectare. The studies have shown strong farmer confidence in the crops with nine of 10 Indian farmers replanting biotech cotton year on year. Coffee: The leading states in coffee plantation and harvesting are Karnataka and Kerela which constitute abouttt 70% of the overall area utilised. The overall area covered is 0.38 million hectares. The production of coffee has not yet come out of the stagnation phase notwithstanding a marginal increase from 2.7 lakh tonnes in 2005-06 to 2.9 lakh tonnes in 2006-07. Although India contributes only 4 per cent of total world production, Indian coffee has created a niche for itself in the international market, particularly Indian robustas, which are highly preferred for their blending quality. Arabica coffee from India is also well received in the international market Sugarcane: Sugarcane is one of the most imporatnt cash crop and is generally concentrated in regions of Uttar Pradesh and Maharasthra. The overall area utilised for the same in india comes to 0.38 million hectares and constitutes a mjor source of income for the farmers in Uttar Pradeeesh. It is a eleven month crop with the capability of being harvested three times with the same roots. This saves the farmers a lot in terms of seeds and tillering and is usually preferred over other crops in terms of cost savings. Owing to low sugar prices and the inability of the
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factories to pay farmers for their produce , sugarcane planting has come down to 4.28 million tonnes, down from 5.17 million tonnes a year ago.
Jute:
Jute is the principle crop for farmers in the region of West Bengal which constitutes about 75% of the toal area of 0.8 million hectares. It is a staple crop for people in West bengal and Orrisa and a source of employment to a large number of rural popultaion in industries which use jute as a raw material.
Cotton
3.8 4.2 1.1 26.1 10.6 34.0 6.7 0.7
Gujarat Maharashtra Punjab Andhra Pradesh Haryana Madhya Pradesh Rajasthan Karnataka
Coffee
Karnataka Kerala Tamil Nadu
7.0 5.8
8.1%
9.7% 58.1%
Andhra Pradesh Orissa Arunachal Pradesh
21.8%
0.38 mill hts
9.14 mill. Hts
2.3 4.1 2.7 5.0 6.4
Sugarcane
2.5 0.6 43.7 20.4
Uttar Pradesh Maharashtra Tamil Nadu Karnataka Andhra Pradesh Gujarat Haryana Uttarakhand 0.8 mill hts.
Assam
Jute
1% 7% 16%
Bihar Jharkhand Meghalaya Nagaland
7.6
75%
Orissa Tripura West Bengal
0.38 mill hts
www.indiastat.com
Food Grains: The total area coverage under food grains in 2007-08 has been reported as 124.10 million hectares against 123.71 million hectares in 2006-07. Food grain production in 2007-08, estimated at 219.32 million tonnes-an all time record. Rice production at 94.08 million tonnes, maize at 16.78 million tonnes, soya bean at 9.45 million tonnes, cotton at 23.38 million bales each, an all time record.
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Rice is a primary source of income and employment for the rural folks in the states of West Bengal, Orrisa, Andhra Pradesh and Uttar Pradesh and Wheat is grown on a mass scale in states of Haryana, Uttar Pradesh, Punjab and Madhya Pradesh.
Andhra Pradesh
Total Area: 4.37 mill htr
Rice
Assam Bihar Chattisgarh Gujarat Haryana
Wheat
7.62% 32.38% 13.29% 12.41% 9.21% 8.79%
Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh
13.0% 9.0% 13.0%
8.3% 8.6%
HP J&K Jharkhand Karnataka Kerela Madhya Pradesh Maharashtra Orissa Punjab Rajasthan
10.2%
Total Area: 2.8 mill htr
8.6 AGRICULTURAL PROSPECTS:
India is expected to spend around US$ 14.05 million for the development of organic spices by 2012, particularly on turmeric, chilli, and ginger.
Andhra Pradesh Jute Development Centre Ltd (APJDC) will be setting up a jute park spread over 150acre land in Visakhapatnam, with an investment of US$ 20.49 million. It plans to give up to a total of 5 per cent equity to jute farmers in the region.
The West Bengal Financial Corporation (WBFC) is setting up of small and medium enterprises in sectors such as agro-based businesses and floriculture. It has sanctioned about US$ 43.22 million for 200809.
The Horticulture Department of Andhra Pradesh Government has announced an action plan for 2008 09 with an investment of US$ 152.30 million for the development of nurseries in the public and private sectors and increasing productivity of crops.
The Andhra Pradesh government has sanctioned US$ 773.68 million) for the Pranahita-Chevella Lift Irrigation Scheme. to irrigate an area of 1.22 million acres in the drought prone areas of the Telangana region.
Tata Chemicals has firmed up plans to set up a manufacturing plant for customised fertilisers at Babrala in Uttar Pradesh. The company will invest close to US$ 10.02 million in this facility having a production capacity of 20 tonne per hour.
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8.7 GOVERNMENT INITIATIVE:
2009
Government has been taking various progressive measures to accelerate the growth of this sector. Some of the recent initiatives taken by the government include:
In the 200809 budget, the government has given a US$ 12.23 billion waiver of farm loans. Giving a nod to the National Policy on Biofuels under which India will aim to raise blending of biofuels with petrol and diesel to 20 per cent by 2017. This will provide a major boost to the bio-diesel sector. It has also approved the setting up of National Bio-fuel Coordination Committee and Bio-Fuel Steering Committee.
Allowing private sector companies engaged in business of warehousing or transport of food grains in procurement operations on behalf of the Food Corporation of India (FCI).
A weather-based agricultural insurance scheme is rolled out across select districts in 12 states during the Rabi season.
Construction of seven Modern Terminal Markets with modern infrastructure facilities that will help farmers realise maximum returns for their produce, remove middlemen and ensure lower prices for end-consumer.
The government has already approved 60 Agricultural Export Zones (AEZs). Besides, four zones have been identified to provide US$ 12.1 million worth of funds under a scheme called Assistance to States for Infrastructure Development of Exports.
The Government will provide an additional US$ 6.17 billion for new farm initiatives launched by states to double the growth rate in agriculture to 4 per cent over the 11th Plan period.
The National Food Security Mission was launched in 2007, with an outlay of US$ 979.51 million over the 11th Plan (20072012). It aims at enhancing the production of rice, wheat and pulses by 10 million tonnes, 8 million tonnes and 2 million tonnes, respectively by the end of the 11th Plan.
The Rashtriya Krishi Vikas Yojana was also launched in 2007. Under this the States are being provided with US$ 5.01 billion over the 11th Plan period for investment in various projects based on local requirements.
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9. THE RURAL CREDIT SYSTEM Availability of adequate credit is vital for every sector and agriculture is not an exception. In India, Commercial Banks, Cooperative Banks, and Regional Rural Banks ( RRBs) are responsible for smooth flow of credit to agricultural sector. But a huge unorganized market exists for credit to agricultural sector in India, which provide timely fund to this sector but at the exorbitant rate of interest. Among organized credit disbursement to agriculture commercial banks play a vital role with a share of about 70% where as cooperative sector and RRBs contribute 20% and 10 % respectively.Kisan Credit Card (KCC) scheme was introduced to provide adequate and timely support from the banking system to the farmers for their cultivation needs. This scheme has made rapid progress and more than645 lakh cards issued up to October 2006.
NABARD
RBI
ST Coop 41,813 SCBs SCARDBs LT Coop RRBs 140 Branches 22227
Commercial Banks
DCCBs PACs 1,35,000
PCARDBs
Branches 30,750
9.1 CREDIT CONSTRAINTS
A vast majority of Indias rural poor still does not have acces to formal finance. The World Bank (WB) National Council of Applied Economic Research (NCAER) Rural Finance Access Survey (hereafter RFAS 2003) prepared as a background to this report, indicates that rural banks serve primarily the needs of richer rural borrowers: some 66 percent of large farmers have a deposit account; 44 percent have access to credit. Meanwhile, the rural poor face severe difficulties accessing savings and credit from the formal sector Some 87
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percent of the poorest households surveyed (marginal farmers) do not have access to credit, and 71 percent do not have access to savings from a formal source.
The quantum of credit flow to agriculture during the past five years, between 2003-04 to 2007-08. Total ground level credit flow increased at 25 per cent annually during this period to peak at Rs 2,29,399 crore in 2006-07. The credit flow from cooperative system grew at 13 per cent per annum, the lowest among the agencies. As a result, the share of cooperatives in the total credit flow declined from about 31 per cent to a bit below 22 per cent during the same period. 9.2 MICRO FINANCE : A RURAL INITIATIVE Recent years have witnessed the growth of new microfinance approaches designed to serve poorer households. These often involve partnerships between government, non-governmental organizations (NGOs), and banks. Micro finance scheme has been introduced by National Bank for Agriculture and Rural Development (NABARD), the apex bank for agriculture and rural development in India, to improve the access of the rural poor to formal institutional credit and other financial products. In all 547 banks, which include 47 commercial banks, 158 RRBs, 342 cooperative banks are now actively involved in the operation of Self Help Group (SHG)Bank Linkage Programme to spread the facility of micro finance to the needy small and marginal farmers and tiny entrepreneurs. The programme has enabled nearly 329 lakh poor families in the country to gain access to micro finance facilities from the formal banking system. They have an access to over 12 million families and a total membership around 26 million people : 94% women averaging a growth of around 30% + per year. About 1.6 million have been linked with 35,294 bank branches of 560 banks in 563 districts across 30 States.
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They have so far accessed credit of Rs.6.86 billion. Other institutions like the Small Industries Development Bank of India (SIDBI) have been the largest lender to these emerging MFIs, though Friends of Womens World Banking India (FWWB) as well as the National Womens Fund (which translates in Hindi as Rashtriya Mahila Kosh or RMK) have also played an important role. 9.3 THE KISAN CREDIT CARD Another recent approach to providing agricultural credit, including to small farmers, is the Kisan Credit Card (KCC), launched in 199899. By March 31, 2003 some 31.6 million KCCs had been issued by commercial banks, RRBs, and cooperative banks. This system presents a number of advantages to borrowers and lenders, namely by reducing both borrowers transaction costs as well as delays in accessing and renewing crop loans.
9.4 BORROWING AND SAVING HABITS OF THE RURAL CONSUMER
Region States
Farmer Household (HHs) Borrowing from both formal and informal sources No. ( Lakhs) % of HHs 51.4 19.9 40 41.66 53.77 72.7 33.1 48.6
Farmers Households (HHs) Not accessing credit from either of the sources Nos( Lakhs) 53.2 28.36 126.39 158.29 47.92 44.11 0.99 459.26 % of HHs 48.6 80.10 60 58.34 46.23 27.3 66.9 51.4
Northern North Eastern Eastern Central Western Southern Groups of Uts All - India
56.26 7.04 84.22 113.04 55.74 117.45 0.49 434.24
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The above table gives a fair idea about the borrowing habits of the rural masses spread across various regions. It can be observed that rural masses borrow more from both formal and informal sources than those in the North Eastern India. Further Access to capital in the form of loans was also high in the Central region of Inida. These patterns are important indicators of progressment. 9.5 VARIOUS SOURCES OF SAVINGS: The table below shows a increasing pattern of deposits and borrwoings by the farmers. This has been posible through the government initiatives of establishing banking facilities at subsidised rates to the rural folks. Further the need to have a better standard of life and and requirement to sustain farm and other non agricultural activities have encoraged farmers to access these institutions.
Farmers reliance on banking system Farmers deposits (In crores) 26211 1992 99812 2001 108233 2002 Source: www.rbi.org.in
Farmers borrowings In crores 17835 43420 47430
No. of farmers Assisted In lakhs 273 195 197
9.6 SAVINGS ON THE BASIS OF MONTHLY HOUSEHOLD INCOME AND OCCUPATION The table below shows the savings pattern of thr rural masses based on thei monthly household income. Bbank deposits is still the most common instrument of savings which can be seen across various hosehold income patterns and professional prcatises. Post office schemes and NSS, NSC are also preferred mediums of savings which the villagers use. Categories (%) Monthly household income Upto 2500 2501 5000 5001-10000 10001 -15000 Above 15000 Occupation Professional Practise Industry Trade/Business Agriculture Others Total 88.5 60.7 76.2 78.7 62.9 73.2 57.6 50.2 49.9 46.4 45.3 46.3 35.5 18.7 34.3 26.3 22.5 24.1 63.9 80.1 87.1 90.2 96.3 44 50.2 45.9 43 47.6 14.8 29.9 39.1 51.8 46.3 Bank Deposits RDs P.O IVP, NSS, NSC
Source: Survey of Indian Investors, 2003
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10. MARKETING AND DISTRIBUTION IN THE RURAL SEGMENT:

Till recently, the focus of marketers in India was the urban consumer and by large number specific efforts were made to reach the rural markets. But now it is felt that with the tempo of development accelerating in rural India, coupled with increase in purchasing power, because of scientific agriculture, the changing life style and consumption pattern of villagers with increase in education, social mobility, improved means of transportations and communication and other penetrations of mass media such as television and its various satellite channels have exposed rural India to the outside world and hence their outlook to life has also changed. Because of all these factors, rural India in now attracting more and more marketers. Rural marketing has become the latest mantra of most corporates. Companies like Hindustan Lever, Colgate Palmolive, Britannia and even Multinational Companies (MNCs) like Pepsi, Coca Cola, L.G., Philips, Cavin Kare are all eyeing rural markets to capture the large Indian market.
10.1. FEATURES OF INDIAN RURAL MARKETS: Large, Diverse and Scattered Market: Rural market in India is large, and scattered into a number of regions. There may be less number of shops available to market products.
Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with agriculture prosperity. In the event of a crop failure, the income of the rural masses is directly affected.
Standard of Living and rising disposable income of the rural customers: It is known that majority of the rural population lives below poverty line and has low literacy rate, low per capital income, societal backwardness, low savings, etc. But the new tax structure, good monsoon, government regulation on pricing has created disposable incomes. Today the rural customer spends money to get value and is aware of the happening around him.
Traditional Outlook: Villages develop slowly and have a traditional outlook. Change is a continuous process but most rural people accept change gradually. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages.
Rising literacy levels: It is documented that approximately 45% of rural Indians are literate. Hence awareness has increases and the farmers are well-informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a better lifestyle.
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Diverse Socioeconomic background: Due to dispersion of geographical areas and uneven land fertility, rural people have disparate socioeconomic background, which ultimately affects the rural market.
Infrastructure Facilities: The infrastructure facilities like cemented roads, warehouses, communication system, and financial facilities are inadequate in rural areas. Hence physical distribution is a challenge to marketers who have found innovative ways to market their products.
10.2 PROFILE OF A RURAL CONSUMER: Literacy: 23% of rural Indian population is literate and people are getting added to this list year after year. There are still some villages which are underdeveloped. Maximum education is primary school or in some cases high school. To this group the marketing promotional strategy to be adopted is demonstration of product features and advantages. Print media and posters do not make any impact. Income: An average rural consumer has a much lower income than his urban counterpart. The disposable income has increased in the recent years to considerable extent. In spite of this, the common traits of rural consumers are low purchasing power, low standard of living, low per capita income and low economic and social positions. Density: Rural population is scattered across 7 lakh villages. This implies that rural demand is scattered and urban demand is concentrated. Influencers: There are many reference groups in a village. These include teacher, doctor, panchayat members, health workers, bank manager and co-operative board workers. These influencers need to be kept in mind when a marketer decides on rural marketing. Occupation: The main occupation is agriculture. The size and ownership of land determines the basis for differentiation and consumption patterns. Culture: Rural consumers are traditional in their outlook. They associate faster with messages that match their cultural behavior. Language: English is not a language of rural India. Hence a marketer should aim for communication in the local language. Media Habits: Television, radio, vedio and theatre are some of the traditional media that a rural consumer identifies with.
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10.3. 4AS OF THE RURAL MARKET Affordability: With low disposable incomes, products need to be affordable to the rural consumer, most of who are on daily wages. Some companies have addressed the affordability problem by introducing small unit packs and affordable equipment. Accessibility: To ensure availability of the product or service. Indias 627,000 villages are spread over 3.2 million sq km. More than 40% of Indian villages still do not have access to all weather roads Acceptability : Need to offer tailor made products that suit the rural market. Rural people have different demands when compared to their urban counterparts. Awareness: Usage of various medium to penetrate the potential rural markets. Companies have to trade off with high cost to realize the full potential of the rural sector.
10.4 MARKETING CONSTRAINTS The rural market may be attracting marketers but it is not without its problems: Poor Infrastructure- Kuccha roads inaccessible during monsoons. Lack of warehousing facility. Low occurrence of retail outlets. Myths and belief and Caste influence continue to prevail in the society Low per capita disposable incomes.
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Seasonal consumption linked to harvests and festivals and special occasions 4,500,000 retail outlets; average 7.12 shops per village, 60000 do not have them at all
2009
Highly dispersed village settlements - 75% of village population spread over all over 6 lakh villages 85% of villages less than 5000 people
Insufficient Credit Accessibility. 80% of the people in the rural areas do not get access to organised credit facility.
10.5 MARKET ACCESSIBILITY Keeping in mind the marketing constraint and the behavior of the rural masses, companies have adopted innovative ways to get an access to so called inaccessible markets. Some of the common ways used by companies to reach the rural people have been shown below.
Direct Distribution Direct distributor Van Operators Low business turnover Co. owned and hired sales and promotion Dabur, BPCL, Reckitt , HLL, ITC, PARLE, GODREJ Super and sub stockist 1-2 % margin , interior areas HLL, Dabur, Reckitt, Coleman India Ltd, Marico
Indirect Distribution
Wholesalers Retailers Haats Melas Barefoot Salesman Self Help Groups Mobile Traders E Distribution Postman ITC e-choupal, TARAHaat, ikisan.com HLL Project Shakti, major influencers Rural and Urban wholesalers -60% of sales Major buying influencers 47000 haats, better coverage annual sales 3500 crores 30000 melas held, average sales - Rs. 243 lakhs
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Indirect Distribution cont..
Syndicated Distribution NGOs Cooperative Socities Public Distribution System HUBS ITC, DSCL, GODGREJ, RELAINCE, 93% coverage village; 70% rural population JK Diary
2009
This concept is very useful for village with a population of less than 2000 which are not very cost effective for the companies to target directly. The Mobile traders deal with not very expensive items but are a very important source of information providers to the housewives. The products sold by them are generally FMCG products, accessories, utensils, etc.
Mobile Traders
Community Number of moile traders Estimated reach Population of villages Products Average sales Source: O&M
Banjaras, Bisatis, Bajajis, and Kujras 400000 8 crore villages 2000 or less FMCG , Clothing, accessories, utensils, etc Rs 250 Rs. 700
10.6 THE CONCEPT OF HAATS AND MANDIS Haats and Mandis are known to attract a huge number of vllagers who gather there to socialise and buy goods and services. There are over thousands of such events happening every week across the country and some of them are linked to festive and religious occassions. Corporates have seized this opportunity to market their products and services as this allows them the cost advantage of not having to reach all the villages. NCAER estimates that around half of items sold in these melas are FMCG products and consumer durables.
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Haats
Facts and Figures
Total number of Haats Average no of visitors Average no of villages catered No. of stalls Average sale at a haat 47,000 4580 14 314 Rs. 2.23 lakhs
Categories of outlet %
Agricultural Products Forest Products Handloom and handicraft Processed Food Fish, meat and poultry Manufactured Goods Services Others 39.5% 2.1% 8.4% 13.2 3.2 24.3 3.3 6 100 MART Study
Melas
FACTS AND FIGURES
Number of melas held annually Average no of visitors Average no of outlets Average sales Source: MART Study 30000 (out of which 500 are major ones) 7.6 lakhs 854 Rs. 243 lakhs
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Cont.. Categories of outlets (%)

Agricultural Products Forest products HANDLOOM AND HANDICRAFT Processed Food Entertainment Manufactures goods Services Others Total Source: MART Study 5.6 0.1 15.6 19.5 4.0 42.5 4.2 9.0 100
11. THE BUYING BEHAVIOUR OF THE RURAL CONSUMER:
The buying behavior of the rural population has undergone a remarkable change as they are now consuming everything right from a shampoo to a car. Decision making has become a joint effort and women are now playing an increasing role as initiators, man as a financers and a child as an influencers. To understand rural
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buying behavior, marketers must first find the factors that influence buying behavior and the variation in behavior.The followings factors can be taken into consideration while segmenting the rural population: SEGMENTATION Environment of the consumer Geographical Influences Influences of Occupation Socio economic consideration
ENVIRONMENTAL INFLUENCES: A villagers needs are different from his urban counterpart. The environment is a critical influencer in shaping the needs of the rural consumer. Products of urban specification may be impractical in rural settings. A common example here is the usage of electronic gadgets of urban specifivcation which may not withstand constant voltage fluctions as seen in rural areas. A rural consumer may not mind paying more for something which can withstand such frequent voltage fluctuations. GEOGRAPHICAL INFLUENCES: The rura; market is hetregeneousin nature. Geographical variation in exposure to urban centres abd variations in development hacve resulted in tremendous hetregeneity even within the state. There is an extreme difference between parts of western and eastern UP. This can be seen in the language where in western UP , they speak hindi and in Eastern they speak Bhojpuri. Further people down south are more receptive to scooters than their Northern counterparts. They are more educated and brand conscious as there is a variation in buying pattern when it comes to watches. SOCIO ECONOMIC FACTORS A common classification that is used by marketers to describe the Indian population is the Socio Economic Classification ( SEC). SEC is the classification of Indian consumers on the basis of two parameters : Occupation and Education of the chief wage earner (Head) of the households. The Rural Indian Households are classified into SEC R1, R2, R3 and R4. This parameter is widely used by marketers to assess and segment the rural market based on the products and services offered by them. As per
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statistical Abstract India 2004 the following are the classifications along with the Behavior, Aspirations and Lifestyles of each group of rural masses. The R1 and R2 class consumers are considered to have a higher disposal income and are educated having their own lands pucca houses and own agricultural equipments. . They are classified as the landlords or the affluent lot. R3 are the middle class farmers who have small holdings and minimum education. R4 are the poorest of the lot and live in kuccha houses and never had any formal education. The consumption pattern of R1 and R2 varies to a large extent when compared to Class R3 and R4. The statistical abstract India 2004 states that about 58% of the rural consumers belong to class R4 and only 7% belong to R1 and R2. The rest are R3 class rural consumers. This can be shown as below:
Distribution of household by SEC
21.5
2 5.4
14.5 19.2
SEC R1 SEC R2 SEC R3A SEC R3B SEC R4A SEC R4B
37.4
Indiastatistical abstract india 2004
11.2 ROLE OF OPINION LEADERS:
The role of the opinion leader plays a very important role when it comes to determining the purchasing decision made by the rural consumers. Usually class R3 and R4 people use the help of opinion leaders to quite an extent when it comes to buying something which may be little expensive. The opinion leader can be classified as Sarpanch of the village, progressive farmers, college educated , bankers, Nurses and teachers. The table below give a brief of hoe each plays a role in various product and services being avaled to the potential rural consumers.
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Opinion Leaders
Area of Influences
Sarpanch/Gram Pradhan
Village administration, conflicts, Introducing new Ideas, Agriculture equipment, Fertilizers, Seeds, Govt. policies. Agricultural equipments, Fertilisers, Seeds, Credit Facility, Methods of cultivation, etc. Purchase of durables, Apparels and Technology. Education. Family planning issues and medical Fashion and Styles Loans, Agricultural equipment Tractors, Insurance.
Progressive Farmers
College educated Teachers Nurse/ Midwife Film Stars Bankers
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12. INDIA AGRICULTURAL EQUIPMENT INDUSTRY
12. 1 AN OVERVIEW: Agricultural Equipment industry plays a key role in supporting the performance of the agricultural sector in India. Farming activities are increasingly getting mechanised, and the availability, quality and performance of agricultural equipment has an increasing impact on improving the output and productivity of the agricultural sector. The Indian Farm Equipment Market is expected to grow at a CAGR of ~5%.
Indian Agriculture equipment contributes about 10% of the global equipment market. Global major players like John Deere, New Holland and Same Deutz have already made entry in Indian Market
Many factors affecting agriculture equipment sales in India include monsoons, govt MSP, commodity prices, fuel, credit policy , labor movement.
Share of animal power declined from 43.5% in 1971 -72 to 9.5% in 2000 - 01
World Agriculture Equipment Market -2006 , $66 USD Billion

3.2 24 34 8.8 30
North America Western Europe Others Asia Pacific Africa/Middle East
WWW.IBEF.ORG
World Agriculture Equipment Market (2006-2010) USD Billion

100 80 60 40 20 0
66 69 72 76 80
World Agriculture Equipment Market (2006-2010) USD 2006 2007 2008 2009 2010
WWW.IBEF.ORG
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The manufacture of basic agricultural implements is largely by village artisans and tiny units, small scale industries and the State Agro-Industrial Development Corporations. Medium scale industries operate in their own premises with adequate infrastructure, sometimes forming a part of an industrial estate. They also have manufacturing and marketing facilities and employ skilled manpower. Products such as diesel engines, electric motors, irrigation pumps, sprayers and dusters are produced in this sector. Complex products such as land development machinery, tractors, power tillers, post harvest and processing machinery and dairy equipment are manufactured by large players in the organised sector. These firms typically have large manufacturing facilities, professional marketing network of dealers and provide effective after sales service. Mahindra & Mahindras Farm Equipment Sector (FES), which designs, develops, manufactures and markets tractors for Indian and overseas markets, is the largest manufacturer of tractors in India. Other major players include TAFE, New Holland, John Deere and Punjab Tractors.
12.2. SWOT ANALYSIS
Customer Power - Medium Wide variety of choice for customers Many customers do not have access to organised finance
Supplier Power - Low Well developed supplier industry Most suppliers are small and lack of economies
Threat of New Entrants - Medium Current players well established New entrants will need to invest in Brand, Distribution, Financing and Service Network Competitive Rivalry - High Number of well established players, with new players entering Good technological capability Increased mechanisation presents new growth opportunities
Threat of Substitutes -Low New innovations in semi-automated mechanisation being tried out, in place of capital intensive equipment
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12.3 EVOLUTION IN FARM PRACTICES
2009
Over the years, the share of human and animal power in agriculture has reduced drastically, paving the way for a variety of equipment to emerge. Many of these are driven by tractors, diesel engines or tillers. Several of the traditional processes agriculture have been transformed with the advent of mechanisation
PROCESSES
Traditional Practices
Current Practices
Development , Tillage and Seedbed Preparation Sowing and Planting Weeding and inter cultivation
Plough and blade harrow
Tractors, Mould board plough, disc plough
Dibblers Hand hoes and animal driven weeding tools, Human labor Dusters Manually using sickle
Modern seed drill and planters Tractor operated implements
Plant protection Harvesting and threshing
Blower and power sprayer Combine harvesters, tractor mounted implements, threshers and reapers
12.4 MECHANISATION AN ESSENCE
One of the prominent cause of mechanisation is that there has been an increasing trend of migration of rural population to urban areas, to seek better job opportunities and lifestyles. This is primarily due to improvement in income levels and quality of life in cities, enabled by the boom in services and manufacturing sectors. As a result, the number of agricultural workers has been declining, and it is expected that the percentage of population involved in agriculture will come down from the present 60 per cent to close to 40 per cent by 2020. The decrease in number of manual workers has necessitated the move towards increased mechanisation.
Further easy availability of financing has been a key driver of consumption across different sectors in India, and agriculture is no exception. More than 90 per cent of tractor purchases in India are on credit.
Corporate farming is another area which has fuelled demand for mechanisation. There have been several examples of successful contract farming ventures in India companies like Pepsi Foods, Rallis and Appachi Cotton have been involved in successful ventures. Contract farming enables the farmer to get the benefit of
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technology, training and financing with the contractors support. This facilitates adoption of mechanised farming practices.
Subsidies by the government is an encouragement for the farmers to increase productivity by using modern machinery in their farms such as tractors, threshors, ploughs, machine sprayers, combine harvestors, etc.
Further, good monsoons means good yeilds which give the farmers a better income from their produce which further enhances their capability to buy technology.
Improved Credit Facility: Realization on the part of private commercial bank about the potential in the rural sector. More players foraying into the untapped market owing to saturation in urban areas Emergence of Corporate Farming: Tie up with MNCs and other food processing companies give assurity to farmers about their produce and encourages them to purchase equipment to boost productivity. Migrating Labor force to Urban Areas: One of the prominent problems that will plague Indian rural as large number of individual are migrating to urban areas for better standard of living. Subsidy: Government initiative to increase productivity and standard of living of the rural masses by providing subsidy so as to increase the purchasing power
Good Monsoons: Good and poor monsoons have a direct impact on the purchasing intention.
12.5 STATUS OF FARM MECHANISATION IN INDIA Even though farm mechanisation shows an increasing trend, there are wide ranging disparities in the levels of mechanisation across states.
Northern States such as Punjab, Haryana, Uttar Pradesh (particularly Western and Tarai belt) have achieved a faster growth in mechanization over various Plans The sale of other implements and machines like combine harvesters, threshers and other power-operated equipment have been increasing almost throughout the country
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The pace of mechanization in North-Eastern States has not been satisfactory due to constraints such as hilly topography, socio-economic conditions, high cost of transport, lack of institutional financing and lack of farm machinery manufacturing industries Mechanization in Western and Southern states of the country viz., Gujarat, Maharashtra, Rajasthan and certain areas of Tamil Nadu, Andhra Pradesh etc., has increased with the increase in area under irrigation and also with the growing awareness among farmer.
12.6 BENEFITS OF MECHANISATION
Farm mechanization is regarded as sine-qua-non to reduce the human drudgery and enhance the agricultural productivity. During the post-green revolution period, the impact of farm mechanization on agricultural production and productivity has been well recognised in India. Depending upon the use of other inputs such as irrigation, high yielding seed varieties, chemical fertilizers, herbicides and pesticides, different States in India have attained different levels of mechanization.
Agricultural mechanization has made significant contribution in enhancing cropping intensity. The growth in irrigated areas and tractor density has had direct bearing on the cropping intensity. There has been a substantial increase in productivity and efficiency by using agricultural machines vis a vis using traditional equipment such as bulls for ploughing and men for harvesting. Timing is an imporatnt elemenst when it comes to plantations and harvesting and any delay can severly affect the entire cropping cycle and thus affect the yeilds to a large amount. The economic advantage of mechanisation can be seen in the table provided below:
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12.7 AVAILABILITY OF TOOLS As per indiastat.com there is a high usage of manual seed drill wherein the availability is 153 units per 1000 hectares which as compared to other developed nations is very minimal. Further the availability of tractor is 85 units per 1000 hectares which again is very low in numbers considering the number of people involved in this profession. Further usage of other modern equipment such as potato digger, rotavator, and other tractor operated implements are not very prominent and only used by the selected few prosperous farmers. However subsidies given by the government and mass awareness has led to a gradual buying of such implements.
Availability in nos. per 1000 hectares

18.8 18.2
Manual seed drill
Manual Seed Drill/Seed Cum Fertilizer Drill Animal Drawn Seed Cum Fertilizer Drill Tractor Drawn Seed Cum Fertilizer Drill Animal Drawn Leveller Tractor Operated Levellers Manually Operated Plant Protection Equipment Power Operated Plant Protection Equipment Drip & Sprinkler Equipments Horticultural Tools (Power Operated)
12.5 8.9 8.3 16.7
153.2
28.5
84.8 6.2
Tractor www.indiastat.com
36.1
Animal Drawn leveler
Tractors Tractor Operated Dise Harrow
7.2
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12. 8 AGRICULTURAL EQUIPMENT
12.8.1 TRACTORS:
Market share
5% 14% 11% 23% 4% 7% 44%
Mahindra & Mahindra TAFE Ltd International Tractors Ltd Escorts New Holland John Deere
www.ibef.org
Others
The tractor industry grew at a CAGR of 16% between 1994 and 1998 and reached plateau in 2001. 2001 and 2003 saw a declining state at negative CAGR of 13.5%. The recovery stage started from 2004. The largest industry in the world . Accounts for 1/3 of the world production Growth @ 5 7 % depending about macro factors. Uttar Pradesh is the largest tractor market in our country. One out of every four tractor is being purchased here. 95% of tractor sales are on credit. Credit is extended by commercial banks, state land development banks and regional rural banks 30-40 hp tractors primarily used in southern and western regions due to hard soil conditions dominate Indian market. 21-30 hp finds its market in soft soil conditions and well irrigated northern states . Expect the domestic industry to stabilize at 300000 units per year by 2010
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300000 250000 200000 150582 150000 100000 50000 0 273181 254825 225280
2009
251198 220937 191329 164841 138879
247531 190336 202708 Tractors Power Tillers
www.indiastat.com
Sale by Hp - 2007
8% 24% 51%
31 -40 hp 41 -50 hp 51 hp
STATEWISE SALES: The Indian tractor industry is the largest in the world accountuing for one third of the world production. In the long term the industry is expected to grow at a rate of 5to 7 percent largely due to the thrust by the government to increase agriculture GDP. 93 percent of the tractor industry is concentrated in twelve states namely Andhra Pradesh, Bihar, Gujarat, Haryana, Punjab, Orissa, Tamil Nadu, Karnataka, Maharsahtra, Uttar Pradesh, Madhya Pradesh and Rajsathan. Uttar Pradesh is the largest tractor market with 44, 308 units sold in 2006-07. Tractor sales in Maharashtra, Karnataka, Tamil Nadu and Gujarat have shown a tremendous growth in the 2005 -06 percent of about 63 %, 54%, 47 %.
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80000 70000 60000 50000 40000 30000 20000 10000 0 1998-99
69665 60342
68354
1999-00
2000-01
Andhra Pradesh Assam Bihar Gujarat Haryana Himachal Pradesh Jammu and Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh
North(Punjab, Haryana & U.P)
26%
29%
Central (M.P & Rajasthan) East (Bihar, W.B, Orissa & Assam)
15% 9% 21%
West(Gujarat & Maharashtra) South (Andhra Pradesh, T.N, Karnataka, Kerela)
www.indiastat.com 12.8.2 FACTORS FOR PURCHASING A TRACTOR:
A rural consumer ususlly uses the influence of a opinion leader when it coes to purchasing a tractor. They can be in the form of a progressive farmer, a tractor owner, banker. The gestation period between deciding and buying a tractor is long owing to information seeking process which may involve consulting with the opinion leaders, checking the performance of the brand in mind which may take months, regular visits to the dealer showroom and deciding the one to choose from. The following factors are important toa rural consumer when it comesto buyin a tractor:
Power Capacity Price Fuel consumption After Sales Brand Value
Desired power requirement based on size of arable land for which it is being used.
Due to lack of sufficient funds, Price is considered the most important criteria Fuel consumption factor is more important for farmers with higher power capacity equipment. After sales service is considered as a moderately important criteria Brand preference varies across the different regions and geographies across the country
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12.8.3 THE ECONOMIC IMPACT OF A TRACTOR: A study in Mathura district of Uttar Pradesh on the basis of three levels of mechanization: (i) (ii) (iii) non-mechanised farms having neither tubewell nor tractor partially mechanised farms having only tubewell, mechanised farms having both tubewell and tractor.
The yield was reported to be higher by about 10 to 27 percent in mechanised farms and by about 2 to 26 per cent in partially mechanised farms in comparison with non mechanised farms for all the major crops grown on the sample farms. All the crops raised on different sizes of farms, tractor owning farms obtained higher yields per acre and the increase was more for the larger sizes of tractor owning farms.
12.8.4 MAJOR PLAYERS IN THE INDUSTRY:
Mahindra & Mahindra Limited (M&M) Distribution and sale of farm equipment and related utility vehicles Established market leadership in the sector over past 24 years One of the top five tractor brands in the world, the company has its own state-of-the-art plants in India, USA, China and Australia and has a capacity to produce 1,50,000 tractors a year Range of Horse power 15 to 75hp. 680 dealers along with widest service network across India.
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Has four manufacturing facilities in India, located in Mumbai and Nagpur in Maharashtra, Rudrapur in Uttaranchal and Jaipur in Rajasthan.
Domestic sales as on Year 2008 -34455 units
Tractors and Farm Equipment Limited (TAFE) A unit company of the Amalgamations Group, one of Indias largest Light Engineering Groups Collaboration with AGCO Corporation, Georgia, one of the largest manufacturers, designers & distributors of agricultural equipment. Has a network of more than 800 dealers, branches, service outlets as well as its own sales offices and depots covering the entire length and breadth of India Range in Hp 41 to 50 hp Domestic Sales as on year 2008
John Deere John Deere established a green field project in 1999 under a 50:50 joint venture with Larsen & Toubro Limited (L&T) A state of the art tractor manufacturing plant for 5000 series John Deere tractors was set up at Sanaswadi, near Pune, in the state of Maharashtra Tractors manufactured in Sanaswadi are also exported to the USA, Mexico, Turkey, North and South Africa, and South East Asia. The company has received awards for export excellence in 2005 and 2006 from the Engineering Export Promotion Council. Range in Horse power 35 to 75 hp
New Holland: In 1999, New Holland AGs parent company FIAT bought 70 per cent of holdings of Case Corporation and created Case New Holland Global.
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In 2000, the capacity of the Noida plant rose to 12,000 tractors per year and in 2007 the company can manufacture close to 24,000 tractors for the domestic and export markets.
New Holland India exports fully-built tractors to 51 countries in Africa, Australia, South-East Asia, West Asia, North America and Latin America. It also exports subassemblies and other tractor parts to the facilities of CNH Global, around the world.
Manufactures tractors between 35 -37 hp.
12.8.5 OTHER AGRICULTURAL EQUIPMENT: Usage of power tillers have been prominent in small scale holdings and orchards. The year 2001 saw 16018 units being sold but owing to choice of using tractors and other factors such as credit facility, power tiller saw a fall in sales to 15000 units after having had high sales of 22303 units in the year 2006.
Power Tillers Sale

30000 20000 10000 0 2001 2002 2003 2004 2005 2006 16018 22303
www.ficci.com
15000 Power Tillers Sale
2007
2008
Further owing to electricifcation of villages and farmlands, there has been a huge usage of electric pumps which save the farmers from the onslaughts of repeated diseal prices hikes by the government. A total sale of 11.86 million electric pumps was reported in the year 2005 -2006 a jump of about 24 %. The government has given huge subsidies in the form of either free power supply or at rates to farmers so as to avoid the cost associated with diseal while using diseal pumps. Further as per the FICCI report use of threshors by farmers with medium and small scale holdings has increased by nearly 20% since 1994, use of Harvesters has increased by nearly 5 % since 1994, usage of Reapers has increased by nearly 315% since 1994, usagese of levelers has increased by more than 35% since 1994 and usage of Maize Shellers has increased by nearly 61% since 1994.
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15 10 5 0 1991 -1992 14000 12000 10000 8000 6000 4000 2000 0 1994
WWW.FICCI.COM
2009
11.866 Million 9.525 4.8 6.019 5.528 7.464 6.466 7.432
units
Diseal Engines Electric Engines
1995-1996
2000 -2001
2005-2006
11595 9602 6779
Threshers Harvestors Reapers Levelers Power tillers
2782 1540 1351
1465
2057
1551
2450
2749 1614
Tractors Disc Harrow Potato Digger
1998
2002
2006
12.9 GOVERNMENT SUBSIDIES:
2003-04 2500 2000 1500 1000 500 0
2004-05
2005-06
2006-07
Source: www.indiastat.com
Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttaranchal West Bengal
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The Government of India has initiated several steps to improve mechanisation and boost farm productivity. Assistance in the form of subsidy at the rate of 25 per cent of the cost with permissible ceiling limits is made available to the farmers for the purchase of agricultural equipment including hand tools, bullockdrawn/powerdriven implements, planting, reaping, harvesting and threshing equipment, tractors, power-tillers and other specialised agricultural machines under the centrally sponsored scheme of Macro Management of Agriculture. According to the Economic Survey 2006-2007, 7,292 tractors, 16,500 power tillers, 64,610 hand tools, 41,854 bullock-drawn implements, 15,236 tractordriven implements, 6,080 self-propelled/power-driven equipment, 81,496 plant protection equipment, 6,587 irrigation equipment and 66,464 gender-friendly equipments were supplied to the farmers under the Scheme during 2005-06. Some initiatives undertaken by the government are as follows: Promotion of agricultural mechanization
In this scheme, subsidy for the purchase of tractors below 18 hp to hp along with 3 matching implements is being provided to farmers, individually or in a group, having irrigated land between 2.4 to 3.2 ha. Subsidy rate is 30% of the cost to a maximum limit of Rs. 30000. Special food production programmes (for wheat, maize and millet)
Under these programmes subsidy is provided up to 50% of the cost limited to Rs. 1500/- per implement/ farm on bullock drawn implements. Under maize and millet programmes, subsidy is also provided on plant protection equipment limited to 50% of cost or up to Rs.600/ Intensive cotton development programme
Under this programme subsidy is being provided on plant protection equipment up to 50% of cost limited to Rs.600 for manually operated equipment and 25% of cost limited to Rs. 4000 for tractor mounted equipment. Integrated programme for rice development
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Under this programme subsidy is being provided on animal drawn implements, rice transplanter and water pumps up to 50% of cost limited to Rs.1500. Subsidy is also being provided on power tillers up to 25% of cost limited to Rs.12000. Development of industrial designs of prototypes of implements
This scheme was approved for the 8th plan with an outlay of Rs.13.5 million. The scheme envisages identification of improved, nearly developed equipment and grant of financial assistance to the R&D institutions for developing industrial designs together with jigs and fixtures needed for their commercialization. Other Initiatives Fund of Rs.5,000 crore to be created in NABARD to enhance its refinance operations to short term cooperative credit institutions Rashtriya Krishi Vikas Yojana launched with an outlay of Rs. 25,000 crore, National Food Security Mission with an outlay of Rs. 4,882 crore under National Policy for Farmers in the Eleventh Five Year Plan. RKVY aims at achieving the 4 per cent annual growth in the agriculture sector during the Eleventh Five Year Plan period by ensuring a holistic development of agriculture and allied sectors. Growth of agricultural credit set to exceed target set for 2007-08. For 2008-09, target set at Rs.280,000 crore, with short-term crop loans continued to be disbursed at 7 per cent per annum; initial provision of Rs.1,600 crore made for interest subvention in 2008-09. Corpus of RIDF-XIV to be raised in 2008-09 to Rs.14,000 crore, with a separate window for rural roads. National Horticulture Mission (NHM): NHM covering 340 districts in 18 States and two Union Territories, provided Rs.1,100 crore in 2008-09. Crop Insurance: National Agriculture Insurance Scheme (NAIS) to be continued in its present form for Kharif and Rabi 2008-09. Rs.644 crore provided for the scheme. Bharat Nirman has made impressive progress in 2007-08 with 290 habitations provided with drinking water each day, 17 habitations connected through all weather road, 52 villages provided telephones, 42 villages electrified & 4,113 rural houses completed each day.
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Complete waiver of all loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008 for marginal farmers and small farmers. About 3 crore small and marginal farmers and about one crore other farmers to benefit from the scheme; Total value of overdue loans being waived estimated at Rs.50,000 crore and the OTS relief estimated at Rs.10,000 crore
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13. GOVERNMENT PROGRAMS FOR RURAL UPLIFTMENT:

13.1 BHARAT NIRMAN Time bound programme to develop infrastructure during the tenth and eleventh Year plan with an investment proposal of Rs. 174000 crores for four years in 2005. Areas: Irrigation, Drinking Water, Electrification, Roads, Housing and Rural Telephony
Targets for 2009: To create 10 million ha of additional irrigation capacity To provide all weather roads to every inhabitants in areas with population above 1000 and above. To provide electricity to 125000 villages and to 23 million households To construct 60 lakh households To provide water to 55067 uncovered habitants by 2009 To connect remaining 66822 villages with telephone.
13.2. PRADHAN MANTRI GRAM SADAK YOJANA: A sub programme under Bharat Nirman and 100% centrally sponsored scheme. Roads play a vital role in S ocio economic upliftment of rural community. Value of proposal Rs. 646 billion out of which Rs. 286 billion released. Of the total 3.3 million km road network, rural roads account for around 2.6 million km (80%). Estimated 66,802 habitants would get access with a road length of 1,46,185 km. Also proposed to upgrade 194,132 of existing roads for ensuring farm to market connectivity.
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13.3 NATIONAL RURAL EMPLOYMENT GUARANTEE ACT (NREGA)
The NREG was launched on February 2, 2006 and the first full year of operation was 2006-07 covering 200 districts.
The primary objective of the scheme is to provide guaranteed work for 100 days for any household wishing to have such employment
The secondary objective is to ensure that employment generated is from works that raise land productivity.
13.4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY) SGSY is a major on-going scheme for the self-employment of the rural poor. The basic objective of the scheme is to bring the assisted poor families (swarozgaris) above the poverty line. Provides income generating assets through a mix of bank credit and government subsidy.. The scheme involves organisation of the poor into Self Help Groups (SHGs) During 2008-09, an amount of Rs.1989.60 crore has been released The ministry has released a sum of Rs.9262.37 lakh for setting up 1647 village haats, each district have 3 such haats.
13.5 INDIRA AWAAS YOJANA (IAY) The IAY is being implemented as an independent scheme since 1996. It aims to provide assistance for construction / upgradation of dwelling units to the Below Poverty Line (BPL) rural households, with special emphasis on SCs, STs and freed bonded labor categories. A maximum assistance of Rs 35,000 per unit is provided for construction in plain areas and Rs 38,500 per unit for hilly/difficult areas. Rs 15000 is given for upgradation of a dwelling unit for all areas. The funding of IAY is shared between the Centre and State in the ratio of 75:25. (100% in the case of UTs).
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The total fund available for construction of houses and upgradation during 2007-2008 is Rs. 876.03 lakhs and Rs. 144.35 lakhs respectively.
During 2008-2009 the total availability of fund per new construction is Rs. 275.48 lakhs
There are manymore programs initiated by the government which have been successful in developing the ruarl sector of India. It is important to keep a close tab on such policies especially the ones related to the development and construction - Pradhan Mantri Gram Sadak Yojana as they provide an opportunity to the construction equipment manufacturers to sell their machines and equipments. This can be seen in the case of JCB India Ltd rural activity - Rural Attack where the states selected are Rajasthan, Uttranchal and Gujarat where massive funds are being allocated by the representative state government for Rural Development in terms of infrastructure roads, bridges, housing, canals, watersheds, dams, etc.
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14. RECOMMENDED STATES
Owing to government diverse policies and fund allocation, the growth of various states across India has not been equal or consistent. There still is a huge difference when it comes to the overall development of various states across India. It is likely that attractive pockets will emerge in certain parts of India rather than on a whole. Southern states have had a relatively better rural infrastructure and other basic provisons which have a direct impact on the daily lives of the people residing there. Even such states have attracted a huge amount of foreign direct investments , contributing more than 60% of the GDP and posting better social indicators.
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Based on my earlier findings in terms of consumption patterns, levels of incomes, occupations, and level of mechanisation I have shortlisted these states as a possible lucrative markets for JCB India to look into.
14.1 ANDHRA PRADESH The state has been performing well in engineering industry producing a range of intermediate and final goods such as foundry and forging items, machine tools, etc. Huge infrastructure projects are in place. New international airport construction is on in Hyderabad. New flyovers and other infrastructure developments to cater to this fast growing state are in place. The state promises good quality manpower. The state has high literacy rates. Many global players like Tecumseh, BPL, Electrolux, among others have established their manufacturing facilities in the state. The contribution of exports of machinery has been around US$ 35 million, which has grown at CAGR of around 50 per cent.
14.2 SWOT ANALYSIS Strengths : 1. Manufacturing industry in this region has grown considerably. It has a large number of manufacturers in the small scale sector. Village artisans, who are engaged in fabrication, repair and maintenance of agricultural machinery, mostly traditional are gradually diversifying to improved implements. 2. One tractor manufacturer, one power tiller manufacturer, many pump manufacturers, thresher manufacturers are located in this region. 3. Most of the needs of agricultural machinery is met through indigenous production. The industry in this zone is technically sound and competent. 4. Tradition of custom servicing and custom hire amongst the rural people for field operations is common in this region. 5. With increasing agricultural production and income of people, there has been an upward swing in the demand for processed and high quality foods. Food processing industry has been growing at a reasonable pace and any innovation in PHT and consumer food material or processed product has fair chances to get into the market speedily. There is increasing trend towards quality consciousness in increasing middle classes that have paying capacity. 6. There are many ICAR Institutes and SAUs located in undertaking research and development and
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KVKs for transfer of technologies. The Research Institutes contribute in generating location specific technologies. 7. Availability of technical personnel, farm machinery and post harvest technology experts will be abundant with 3 Agricultural Engineering Colleges with Post Graduate research facilities located in this region. Weaknesses: 1. Most of the Land holdings in Andhra Pradesh are very small, less than 1 ha. About 6090% farmers in Andhra Pradesh have less than 2 ha. farm holdings, with associated constraints of being resource poor, low risk abilities, practising mixed farming, thereby, making task of mechanization and post-harvest management difficult. 2. Holdings have become too small to sustain a family, forcing them to seek alternate/ supplemental employment. 3. There is paucity of labour at peak demand period. Tractive power and matching implements continue to be a constraint to farming, resulting in untimeliness in field operations, making jobs arduous and lowering crop yields. 4. There is a vast gender bias in the wages. Ergonomic and safety considerations in design of hand tools, bullock drawn implements and stationary farm machines require consideration. 6. Horticulture is an important thrust area for diversification of farming, but hardly any mechanization has taken place except for tillage, irrigation and transport operations. 7. The after sales service for the farm machinery and sourcing of spare parts are rather slow though the infrastructure facilities are reasonably good. 8. The farm equipment being manufactured by small scale manufacturers need to be looked at from the point of view of quality and standardization. Even the power tillers lack in terms of specific fuel consumption, noise and vibrations, and other safety and ergonomic aspects. 9. The manufacturers are in small scale sector and are not quality conscious, which results in frequent break down of machineries in the farms. 10. The State Governments in this region need to focus more on mechanization aspects. 11. The infrastructure for transfer of engineering technologies, through awareness campaigns, demonstrations, trainings; for quality manufacture, supply, and after sales service of agricultural implements are weak and inadequate. The extension activities for mechanization is carried out only by R&D centres, that too, to a limited extent.
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12. In the absence of proper plant protection equipment and techniques, for tall crops, plantations and high density orchard crops, there is significant loss of production due to diseases and pests. 13. The farmer is only a producer and not a primary processor of his produce. 14. Though women are involved with various unit operations of agriculture, the farm equipment are mostly designed for operation by men folk. 15. Farmers sell their produce without value addition and thus have low economic returns. There is hardly any incentives for high productivity. Threats: 1. Failure in maintaining desired levels of production, productivity and PHT can lead to food shortages, nutritional insecurity, social in-security and economic collapse in this zone. 2. The globalization of trade gives MNCs an easy access to many industries, import technologies at a higher cost and prevent adoption of low cost indigenous technologies. Many imported machinery have been introduced in rice farming operations. 3. Failure to mechanise the farming, at least selectively, would result in higher cost of production of food grains, bringing less revenue to farmers. 4. Failure to make agricultural operations labour friendly with improved machinery and tools to reduce human drudgery, would result in rural youth migrating to cities in search of employment, causing delays in agricultural operations. Opportunities: 1. Mechanization can encourage farmers to expand their area under cultivation of crops. 2. India has emerged as number one tractor producing country in the world but the tractor distribution is not adequate. More draught power is required in the farms to meet the demand. About 2.5% of the total 105 million farm holders in the country possess 2.7 million tractors and only about 25% of the total land is estimated to be cultivated by tractors. 3. Drips and sprinklers have great potential to use the available water more efficiently, increasing net irrigated area and providing sustainability in summer months. 4. There is tremendous scope for adoption of many other promising farm equipment. 5. Opportunities also exist for export of agricultural machines and value added agro-products to other Asian and African countries.
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14.3 GUJARAT
The state in the past attracted FDI amounting to around 7 per cent of total FDI approvals in India till 2004. The state offers quality manpower and infrastructure facilities such as power, water supply, ports, and gas grid. This has encouraged many multinational companies to set up manufacturing operations in this state. Engineering sector is highly attractive in this state. This sector is supported by proactive policies and is capability driven. 14.4 SWOT ANALYSIS Strengths: 1. Average size of holdings in 199596 was 2.62 ha compared to the national average of 1.41 ha. Area under medium and large holdings was 51.3% of total cultivated area. This figure increased to 78.7% if semi-medium holdings were grouped with medium and large holdings. 2. Plains dominate the topography. 3. Alluvial soils and medium black cotton soils which are suitable for mechanized cultivation account for 70% of area under cultivation. 4. Soil and ambient temperatures favour cultivation of commercial crops like groundnut, cotton, vegetables, selected fruits and spices which imparts economic viability to mechanization. 5. Survey data confirms that the number of tractor users in much larger than the number of tractor owners and relatively few farmers depend on draught animals and labour alone for power. The multi-farm use of tractors and farm equipment has already become a common practice. 6. Good draft cattle are available for mechanization of crop production operations under poor traction conditions (heavy black cotton soils) using animal drawn equipment. 7. Good infrastructure, extensive banking network and a strong industrial sector have created the potential for manufacture, marketing and introduction of better farm power sources and equipment. 8. Sardar Sarovar project will increase the area under irrigation which will raise intensity of cropping and land productivity and encourage investment on mechanization. 9. Remittance of money by non-resident Gujaratis who have their roots in Gujarat villages offers a source of funds for investment in agricultural machinery and power units.
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10. Government has planned substantial increase in production, productivity and cropping intensity in the next few years. 11. Govt. plans to expand and strengthen agroprocessing activities, particularly for export purpose, which will require good quality raw produce.
Weaknesses: 1. Twelve out of 26 districts of Gujarat are drought prone. Without assured irrigation, the risk of crop Failure is too high. This discourages investment on mechanization. 2. Heavy allocation of irrigation resources to grow crops like rice and wheat, which yield below the national average, restricts the potential to shift to the cultivation of high return crops. 3. The State does not have any policy or plan to encourage and promote the use of better power sources and machinery. On the other hand Gujarat Agro-Vision 2010 proposes a substantial increase in the number of persons engaged in agriculture which will lead to more fragmentation of holdings and increase in the number of inadequately employed persons in the rural sector. In the Agro- Vision 2010 document farm mechanization is not even recognized as an important input to upgrade States agriculture. 4. Capacity and facilities for manufacture and repair and maintenance of farm machinery are inadequate. 5. Extension and training programmes to acquaint the farmer with the development in agricultural mechanization, to carry out farm machinery demonstrations, to help the farmer in the selection of farm equipment and train him in its operation and maintenance and to train rural/small town artisans in repair and maintenance of farm machinery do not exist. 6. The Department of Agriculture is short of well trained and experienced agricultural engineering experts to plan and execute agricultural mechanization programme. 7. R&D programme in agricultural mechanization is very limited. Opportunity 1. A time bound programme to extend water conservation activities to all drought prone areas to achieve better crop stand and extend the growing period can greatly reduce the risk of crop failure. 2. A judicious allocation of irrigation resources will allow increase in the production of commercial crops which will give higher returns to the farmer and improve his capacity and bankability to invest in mechanization.
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3. Efficient irrigation techniques like drip irrigation, production techniques like raised bed cultivation and precision in seed placement and application of fertilizers and plant protection chemicals will not only increase production but also improve the quality of produce and reduce the expenditure on cash inputs.
Threats 1. In view of the diminishing contribution of agriculture to State GDP, agricultural development in general and its mechanization in particular may be relegated to a position of low priority.
2. In its anxiety to absorb more people in agriculture, State may deliberately discourage agricultural mechanization. 3. The emphasis on self sufficiency in cereals like rice and wheat, a carry over from the days of general shortage and ban on inter-State movement of these commodities, may lead to status quo in respect of allocation of irrigation resources and prevent shift in favour of commercial crops which could have created adequate financial capacity at the farmers end to improve production technology including the use of better power sources and equipment. 4. Lack of attention to water conservation oriented practices including irrigation, ground water mining may accelerate and adversely affect the agricultural development programmes. 5. In the absence of proper equipment and technologies, quality of raw material may be too poor to produce processed products of acceptable/ marketable quality.
14.5 TAMIL NADU The state has good quality manpower, high literacy rates, presence of good education, vocational training institutions. The export from engineering/machinery sector has been around US$ 346 million and has been increasing at a CAGR of 20 per cent. Huge infrastructure projects are in place with the development of various SEZs. Investments are also likely to come in mining & minerals. 14.6 SWOT ANALYSIS Strengths 1. This zone is predominantly the rice bowl for the States included under it.
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2. This zone is blessed with important rivers flowing through it which form the source of irrigation. 3. Marine and inland fish farming has developed well in the maritime States in this region. 4. The zone has the advantage of easy accessibility for all agricultural machinery and equipment in view of its strategic location.
2009
5. Major ports like Chennai, Tuticorin, Vishakhapatnam and Paradeep are located in this zone that would enable the logistics accessibility much easier for export/import. 6. The mechanization trend has already begun in coastal areas in Tamil Nadu and Andhra Pradesh. 7. The agricultural equipment manufacturers are located nearer to this zone and a few small manufactures are located within this zone. 8. A major tractor manufacturer and a few thresher manufacturers are in this zone. 9. Custom hiring concept is coming up amongst the farmers in Tamil Nadu. 10. Research Institutes, Regional Research Stations and KVKs are located at different places in the zone for R&D efforts in the region and for Transfer of Technologies. 11. The zone has the headquarters of one Agricultural University, one Veterinary University and also three Agricultural Engineering Colleges. Therefore, the availability of technical expertise for mechanization would be assured. 12. Good service and dealership network are available in Tamil Nadu and Andhra Pradesh. 13. SSI units manufacturing small implements are located in many district headquarters in this zone. Weaknesses: 1. This zone is lambasted by cyclones/storms repeatedly during North East Monsoon causing havoc and huge loss of lives, agricultural crops, damage to soil fertility and many more irrecoverable losses. 2. The zone is prone to natural calamities causing setback to developmental programmes and also requiring huge financial compensation for relief and reclamation works. 3. The holdings are highly fragmented making mechanised field operations difficult since individual ownership of larger equipment would not be viable. 4. Due to the impact of urbanization and village youth unwilling to take up arduous field work, there is paucity of labour at peak periods. 5. Inadequate Tractive power and matching implements is a constraint to farming in many areas in this zone. 6. There is a vast gender bias in the wages. 7. Ergonomic consideration in design of hand tools and bullock drawn implements require to be introduced.
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8. Hill agriculture needs to be promoted in the hilly and tribal areas in the region, particularly in the North East 9. The small hand tools and farm equipment manufactured by small scale industries are to be improved on quality and standardization aspects. 10. The small scale manufacturing units are not quality conscious. 11. The State governments do not have a strong policy on farm mechanization and the State governments would have to be urged/impressed upon to vigorously take up the promotion of farm mechanization. 12. The extension activities for mechanization is carried out mostly by R&D Institutions, that too to a limited extent. Extension activities on agricultural machinery is either totally absent or very meager. 13. The farm equipment/tools available are not women friendly. 14. The farmer is only a producer and not a primary processor of the produce. 15. Value addition to farm produce requires a boost. 16. Non adoption of water harvesting and water management techniques in the delta regions leads to loss/wastage of precious water. 17. The delta farmers in Tamil Nadu often face the problem of non release of irrigation water from reservoirs due to conflicts/disputes between riparian States which affects agriculture. Threats: 1. Unless group farming/contract/cooperative farming is promoted in a long way, the further fragmentation of holdings would reduce the scope for mechanization. 2. Failure to achieve desired levels of production, productivity and PHT may lead to food shortages, nutritional insecurity and economic losses in the zone. 3. Many imported farm equipment have been introduced recently posing threat to sustainability of indigenous manufacturers. 4. Failure to mechanise the farm at appropriate levels, would result in increased cost of agricultural production forcing the farmers to even reduce their area under intensive agriculture. 5. Failure to provide labour friendly equipment would further discourage the reluctant agricultural labour to take up field work and thus may cause delayed field operations. 6. Absence of primary processing centres and value addition of agricultural produce would continue the heavy losses in post harvest operations in the farm. 7. Disaster/calamity management measures like quick processing of the produce during heavy rains to prevent losses during natural disaster, high security storage structures would help in reducing losses.
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Opportunities: 1. By adopting appropriate mechanization technology, the productivity can be increased considerably even in marginal farms. 2. The region receives good rains from monsoon and the water table is high in most of the areas. Good water management practices would help in expanding the area under irrigation. Use of drip and sprinkler irrigation can help in increasing water use efficiency, whenever required. 3. Having closer proximity to major ports and economic zone, opportunities for export of agricultural equipment and value added agro products to other eastern countries are very bright. 4. There is good scope for introduction of technologies for production and culture of marine crustacea, mollusks, marine ornamental fishes, oyster culture etc in traditional marine fishing areas. 5. More fish processing industries would boost the employment and economy of the region. 6. Fruit processing sector can be strengthened.
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15. BIBLOGRAPHY
1. 2. 3. 4. 5. 6. 7. 8. 9. WWW.INDIASTAT.COM. WWW.PLANNINGCOMMISSION.NIC.IN WWW.AGRICOOP.NIC.IN WWW.RURAL.NIC.IN/ WWW.NABARD.ORG/ WWW.INDIARURAL.ORG/ THE RURAL MARKETING BOOOK PRADEEP KASHYAP THE MARKETING WHITE BOOK 2007 -08 CENSUS OF INDIA 2001
10. MGI INDIA CONSUMER DEMAND MODEL 11. STATISTICAL ABSTRACT INDIA OF 2004 12. SURVEY OF INDIA INVESTORS 2003 13. TAPPING RURAL MARKETS V.V. GOPAL 14. INDIA BRAND EQUITY FOUNDATION 2007 15. OVERVIEW OF AGRICULTURAL MACHINERY IN INDIA INDO ITALIAN CHAMBERS OF COMMERCE AND TRADE
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2009

JCB INDIA LTD 2009

JCB INDIA LTD

Market Study and Potential States

JCB INDIA LTD

Summer Project Report

Project Coordinator: Mr. Puneet K Vidyarthi Dy. General Manager - Marketing

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

11.1CONSUMPTION INFLUENCES ........59

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

14.4 SWOT ANALYSIS....85

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Joseph C Bamford (JCB)

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Aditya Bikram Shah International Management Institute

JCB INDIA LTD 3.1.PROMOTERS

The company is managed by Mr. Anthony C Bamford who is the chairman.

The Indian operations are managed by MD Mr. Vipin Sondhi.

Aditya Bikram Shah International Management Institute

JCB INDIA LTD 3.2. MISSION

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

PART B RESEARCH METHODOLOGY

METHOD OF DATA COLLECTION

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

5. INDIAN CONSTRUCTION EQUIPMENT

5.1 SWOT ANALYSIS

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

The report takes part of the Earthmoving segment market.

51% 13% 12% 7% 6% 5%

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Total Market Size - US $ 1.4 Billion

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

6. INDIA - A GENERAL OVERVIEW:

Aditya Bikram Shah International Management Institute

JCB INDIA LTD

Source: Census 1991 & 2001

Aditya Bikram Shah International Management Institute

72.27 71.23 69.65 68.01 66.33

Source: Census of India 2001

Aditya Bikram Shah International Management Institute

JCB INDIA LTD