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Forecast for the development of the agricultural and construction equipment market

Forecast for the development of the agricultural and construction equipment market Forecast for the development of the agricultural and construction equipment market
Release date 04.04.2022
Number of pages 56
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The relevance of research

Agricultural machinery is a wide range of technical means designed to increase labor productivity in agriculture by mechanizing and automating individual operations or technological processes. In agriculture, machinery is commonly used in agricultural facilities and businesses. There is a large number of agricultural machinery that is used for various tasks.

Purpose of the study

Analyzing the state of the agricultural and construction machinery market in India, assessing the market size, analyzing competitors, as well as determining the factors affecting the agricultural and construction machinery market

Content

Chapter 1. Key components of the agricultural and construction machinery market

1.1. Market size
1.2. Growth rates of the market of agricultural and construction equipment
1.3. The ratio of imported and domestic products in the market
1.4. Volume and dynamics of production of agricultural and construction equipment
1.5. Import of agricultural and construction machinery. Volume and dynamics
1.6. Export of agricultural and construction equipment. Volume and dynamics
1.7. Share of exports in production

Chapter 2. Economic characteristics of the market

2.1. Agricultural and construction machinery market trends
2.2. The main problems of the industry
2.3. Estimation of the number of buyers and their financial capabilities
2.4. Estimated consumption per capita
2.5. Analysis of sectoral indicators of financial and economic activity
2.6. Compact location of industry companies in certain regions
2.7. Stage of the life cycle of the agricultural and construction equipment market

Chapter 3

3.1. Economic components
3.2. Social Components
3.3. Technological components
3.4. Political Components
3.5. STEP-analysis of the market of agricultural and construction equipment

Chapter 4. Assessment of the degree of competition

4.1. Scale of competition (local, regional, national, global)
4.2. Number of competitors and relative market shares of the largest competitors
4.3. Competition from substitute products

Chapter 5 Industry Forecasts

5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
5.2. Analysis of the impact on the state aid industry at the current date
5.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the market of agricultural and construction equipment
5.4. Prospects and growth drivers for the agricultural and construction equipment market
5.5. Forecast for the development of the agricultural and construction equipment market in the context of the current economic crisis due to covid-19

Chapter 6 Forecasting Methodology

6.1. Methods for forecasting key industry indicators
6.2. Sources of information for forecasting
6.3. Timing of forecasting

Research excerpt

Chapter 1. Key components of the agricultural and construction machinery market

1.1. Market size

Agricultural machinery is a wide range of technical means designed to increase labor productivity in agriculture by mechanizing and automating individual operations or technological processes.
In agriculture, machinery is commonly used in agricultural facilities and businesses. There is a large number of agricultural machinery that is used for various tasks.
...

Construction machinery is a machine that, through mechanical movements, transforms the dimensions, shape, properties or position in space of building materials, products and structures.

According to the purpose, construction equipment is divided into the following types:

  • earthmoving machines
  • Lifting and transport machines
  • Drilling machines
  • Piling machines
  • Machines for concrete and reinforced concrete works
  • Finishing machines
  • Road cars

Due to the specifics of agricultural production, its seasonality, most types of agricultural machinery are used for a small period of the economic year (during sowing, harvesting, etc.). The construction industry also sees a decline in work during the winter season, while construction does not stop completely, but the volume of work being done is reduced.

1.2. Growth rates of the market of agricultural and construction equipment

Consider the dynamics of the market volume of agricultural and construction equipment in India in value terms for the period 2013-2020.

Diagram 1. Dynamics of the market volume of agricultural and construction equipment, 2013-2020, billion Rs.

The market volume of agricultural and construction machinery has a growing character ...

1.3. The ratio of imported and domestic products in the market

The market of agricultural and construction equipment is dominated by foreign-made products, but its share is gradually declining ...

1.4. Volume and dynamics of production of agricultural and construction equipment

Consider the dynamics of production volumes of agricultural and construction equipment in India.
For the period from 2013 to 2020, in general, the volume of production of agricultural and construction equipment has increased... 
The production of construction equipment was more significantly affected by the impact of the crisis caused by the pandemic - the volume of production for this group of equipment decreased...

1.5. Import of agricultural and construction machinery. Volume and dynamics

The dynamics of imports of agricultural and construction equipment from 2016 to 2020 is growing. 

1.6. Export of agricultural and construction equipment. Volume and dynamics

Diagram 5. Volume and dynamics of exports of agricultural and construction equipment, 2013-2020, billion Rs.

One of the main reasons for the increase in exports of domestic agricultural machinery and construction equipment is related to the implementation of state support measures. Among them:

  • subsidizing part of the cost of transporting products, certification of products in foreign markets in the implementation of investment projects,
  • subsidizing part of the costs associated with participation in congress and exhibition events to promote products to foreign markets,
  • reimbursement of costs to Indian manufacturers for registration of intellectual property objects abroad,
  • insurance support for high-tech exports through REC structures.

To promote the products of domestic agricultural plants abroad, the Rosspetsmash Association, together with the Ministry of Industry and Trade of India, organizes their participation in major international exhibitions, and also conducts business missions in foreign countries.

1.7. Share of exports in production

During the entire period under review, the share of exports in production has fluctuated ...

Chapter 2. Economic characteristics of the market 

2.1. Agricultural and construction machinery market trends

Consider the trends in the agricultural and construction machinery market in India.
Reduction of the Indian fleet of agricultural and construction equipment.
Consider the park of the main types of equipment in agricultural and construction organizations.
...

The fleet of machinery in India is characterized by underequipment and a high degree of wear and tear.
The branch of production of agricultural and construction equipment is focused mainly on the domestic market.

In the market for the period 2013-2020, there is an increase in the share of agricultural equipment of Indian production.
The market is characterized by a large number of different types of equipment, and therefore the structure of imports by country in each case is different.

Due to the fact that, in value terms, India imports mainly tractors, combine harvesters, harvesting machines, harrows, rippers, cultivators, let's consider the main importing countries for these categories of equipment....
In the construction equipment segment, the main types of imported products in value terms are excavators, loaders and bulldozers.
...

The main exported agricultural products are combine harvesters; harrows, rippers and cultivators; seeders, planters and transplanters; harvesting machines.
...

Excavators and truck cranes are delivered, as a rule, to the CIS countries.
...

During 2013-2020, the trade balance (the difference between exports and imports) in the market remains negative. 
Increasing requirements for the development of agricultural production and construction. 
An increase in the number of employees in the agricultural machinery industry for the period 2013-2020 by ... times.

Diagram 11. Dynamics of the population of the agricultural machinery industry, 2013-2020, thousand people

Strengthening the influence of the technological factor and the introduction of scientific developments.

2.2. The main problems of the industry 

The main issues in the industry include:

  • Low level of solvency of consumers in the agricultural sector.
  • High dependence on targeted government programs that stimulate demand from agricultural organizations.
  • The shortage of qualified personnel, namely, the lack of competent machine operators in the economy, who could fully use the capabilities of complex equipment.
  • Seasonality of the agricultural machinery market.

The sphere of circulation of the means of production consumed by the agro-industrial complex, in comparison with similar spheres of other sectors of the national economy, has specific features, which are based primarily on the features of agricultural production. These features must be taken into account when providing agricultural enterprises with the means of production.

These features include:

  • seasonality of production, which determines the uneven consumption of means of production during the year: an increase in its volume during the period of spring field and harvesting;
  • fluctuations in weather conditions, which lead to the need to create reserves and insurance reserves of resources.

Considering that the industry produces equipment throughout the year, the problem arises of matching its supplies with the real seasonal needs of farms.
Handling counterfeit and remanufactured machines, falsified components.
Problems of the construction industry, which also affect the relevant equipment.
...

2.3. Estimation of the number of buyers and their financial capabilities

Consider the data on the population in India and its real income.
...

The main consumers of agricultural and construction equipment are legal entities and individuals directly related to its operation: agricultural, industrial, road construction, utilities, farmers, etc.
...

The gross margin of agricultural organizations in 2018-2019 was lower than the same indicator for all sectors of the Indian economy, in 2020-2021 (January-September) it was higher. The indicator for construction companies was lower than the value for all industries for the entire period under review.

2.4. Estimated consumption per capita

Consumption of agricultural and construction machinery per capita is determined by GidMarket based on the ratio of market size to the population of India.
The dynamics of changes in the consumption of agricultural and construction equipment has a wave-like character. The largest decrease in the indicator is observed in 2015 due to a decrease in the level of solvency of consumers, as well as due to an increase in the population due to the annexation of the Republic of Crimea. 

2.5. Analysis of sectoral indicators of financial and economic activity

Industry indicators are calculated by GidMarket on the basis of financial ratios for the main market operators. Also, data on OKVED-2 related to the production of agricultural and construction equipment were taken into account.
The table shows the dynamics of the gross profit margin (the ratio of gross profit to income). Gross profitability serves as an assessment of the economic efficiency of an enterprise, which reflects the rational use of labor, material, monetary and other resources.
...

Consider liquidity indicators in the agricultural and construction machinery industry. The indicator of current liquidity is a measure of the solvency of the organization, the ability to repay the current (up to a year) obligations of the organization.
The estimated indicator of the current liquidity of a normally operating solvent legal entity must be at least 1, i.e. it is necessary that the total value of current assets be greater than the amount of short-term liabilities.

If the current liquidity ratio is greater than 2, this indicates that the company has more current assets than short-term liabilities with double coverage. The company has a high ability in the short term to pay off its obligations (debts). The normative value of current liquidity equal to 2 was obtained in practice and is most often found in domestic regulations. 
At the same time, in world practice, a coefficient in the range from 1,5 to 2,5 is considered optimal.

During the period under review, the indicator for the sector of agricultural and construction equipment corresponded to the standard, which indicates sufficient economic stability of enterprises.
A more stringent liquidity criterion is the absolute liquidity ratio. It shows what part of short-term liabilities can be repaid immediately, if necessary, at the expense of available cash and marketable securities.
...

During the period under review, the indicator for all sectors of the Indian economy did not fall below 0,34, which indicates a sufficient level of absolute liquidity in the country as a whole. In the agricultural and construction machinery industry, this indicator was almost equal or higher in 2016-2020 and was in line with the norm.
Thus, the gross margin in the agricultural and construction machinery industry does not exceed the Indian average, profitability before tax was higher than in all sectors of the Indian economy in 2016, 2019-2020, current and absolute liquidity are in line with the standards.

2.6. Compact location of industry companies in certain regions

To determine the compactness of the location of companies in the industry, let us consider the volumes of manufacture of agricultural and construction equipment in the union territories and their shares in total production in physical terms.
...

Thus, there is an uneven concentration of production of agricultural and construction equipment, and therefore the compactness of the location of companies in the industry in certain regions differs in different types of equipment.

2.7. Stage of the life cycle of the agricultural and construction equipment market

The agricultural and construction equipment market is at the stage of life cycle maturity. This is evidenced by the growth and decline in the market volume for the period 2013-2020, a wide variety of types of equipment, low solvency of consumers in the agricultural segment, a high standard period for most types of equipment, which is 10 years (at the same time, companies use equipment after the expiration of the standard service life, which is confirmed by a high degree of wear).
...

The main task of the enterprise at this stage is to maintain and, if possible, expand its market share and achieve a sustainable advantage over direct competitors. At the stage of maturity, the main task of marketing activities is to extend the life cycle of the product and involves improving the trading range through product differentiation, entering new segments.
At the same time, it should be noted that market saturation is not predicted in the long term. There is a high demand for machinery for agricultural and construction organizations on the market; the emergence of new manufacturers and models of equipment on the market, which is due to state support for the industry.

Chapter 3

Macroeconomic factors influence the dynamics of all sectors of the Indian economy, including the market for agricultural and construction equipment. The main groups of factors are: economic, political, social and technological.

3.1. Economic components

GDP dynamics
Gross domestic product (GDP) is a macroeconomic indicator that reflects the market value of all final goods and services produced per year in all sectors of the economy in India for consumption, export and accumulation, regardless of the nationality of the factors of production used. 
Gross domestic product is the main indicator on the basis of which the level and pace of economic development are determined. 
...

According to the Research and Forecasting Department of the Bank of India, the main factors that helped to significantly mitigate the economic downturn in 2020 are:

  1. Growth of social budget expenditures aimed at supporting incomes and demand. The peak of anti-crisis budget expenditures occurred at the end of the nd - beginning of the rd quarter.
  2. Monetary policy easing.
  3. Measures to support lending. Regulatory easing allowed banks to increase lending to both the corporate sector and households.
  4. Short-term positive momentum from the removal of most of the restrictive measures at the end of the second quarter. First, this was reflected in a more active recovery of economic activity in the summer months compared to initial expectations, which took place in the conditions of an outstripping closing of the output gap in consumer demand sectors. Secondly, the pinpoint nature of the restrictions due to the autumn increase in the incidence kept the dynamics of consumption from a sharper drawdown.
  5. Replacing foreign tourism with domestic. An additional stimulus to the growth of domestic demand was given by the actual closure of borders due to the current anti-epidemic restrictions. As a result, the seasonal growth of tourist flows was redistributed in favor of domestic resorts. Also, part of the funds not spent on foreign trips was transformed into an increase in demand for goods, primarily non-food items.

Let's consider some experts' estimates of India's GDP dynamics forecast. 
...

Cultivated areas of agricultural crops
...

Chart 21. Dynamics of sown areas of agricultural crops in India (farms of all categories), 2012-2020, million hectares

 

The increase in cultivated areas of agricultural crops has a positive effect on the market for equipment used by manufacturers.
Construction pace
Construction is a type of economic activity that ranks sixth in the structure of India's GDP in 2020 and creates a significant part of the added value of products manufactured in the country.
...

COVID-19 pandemic
In 2020, the spread of a new coronavirus infection, first in trading partner countries, and then in India, had an increasing negative impact on the Indian economy. The introduction of non-working days, as well as additional restrictions on the operation of certain industries, led to a significant decrease in economic activity.

At the very beginning of spring field work in 2020, due to the isolation regime, the activities of service organizations and spare parts stores for equipment were suspended. Agricultural enterprises had to restructure their work. Distribution channels have been redistributed. This especially affected the farmers of the region with their own processing, vegetable growers and potato growers. Restrictions on the movement of seasonal workers also played their role.
...

3.2. Social Components

Population
...

According to the forecast for the period up to 2025, the population will increase only if the high version of the forecast is followed, however, in light of the economic crisis and the coronavirus pandemic, this version of the forecast is unlikely to materialize. 
Real income of the population
General trends in macroeconomic indicators can also be traced in such a value as real incomes of the population, which determine the level of effective demand.
...

The decline in household income leads to an overall reduction in demand in many areas of the economy, both from end-users (B2C segment) and from enterprises (B2B segment), and therefore this factor has a negative impact on the agricultural and construction equipment market in India.
Healthy lifestyle trend

In the modern world, more and more people are asking the question of a healthy lifestyle. Proper nutrition is an integral part of it. Ten years ago, the world's population was not so passionate about taking care of their health and the environment. But today, the trend of self-care, maintaining a healthy lifestyle is gaining momentum. 

In addition to exercising, proper nutrition is gaining popularity. Over the past few years, health food stores, both online and offline, have begun to appear, popular people began to talk about their proper nutrition and training on social networks. All this affects the popularity of healthy lifestyles.
The focus on healthy lifestyles motivates stores to purchase fresh vegetables and products more often, as well as expand the range of organic and farm products.
...

3.3. Technological components

New technologies in the industry
One of the main directions of scientific and technological progress in the manufacturing sector is the development of smart (intellectual) technologies. In them, the role of technological means is played by smart (intellectual) systems, a characteristic feature of which is the ability to respond in a controlled way to external and internal influences, adjusting their parameters in a certain way, depending on the characteristics of the appearance of these influences. Thanks to the intellectualization of production, an increase in labor productivity is ensured while improving the quality and reducing the cost of products.
Smart technologies are becoming more and more widespread in the agro-industrial and construction sectors. The effectiveness and conditions of their application are largely determined by the specifics of production processes in various industries.

Depreciation of the fleet
Currently, in domestic agriculture there is a significant wear of the existing fleet of equipment, in connection with which it can be concluded that there is a high demand for agricultural equipment, which has a positive effect on the market in question.
A similar situation is observed in the segment of construction equipment - the number of construction machines with a service life exceeding the depreciation period is increasing on the market every year.
...

Import dependence of components for the production of agricultural and construction equipment is a negative factor affecting the market.

3.4. Political Components

Certification

Safety requirements for agricultural and construction machines are established in the technical regulation of the Customs Union TR CU 010/2011 ""On the safety of machines and equipment"".

According to the requirements of the technical regulation of the Customs Union ""On the safety of machines and equipment"", agricultural machines are subject to mandatory certification:

  • equipment for planting crops and fertilizing - electric sprayers, seeders and planters;
  • forklift trucks, frontal single-bucket loaders;
  • plows, rippers, cultivators, harrows, rotary tillers;
  • tractor-mounted mowers, hay making machines;
  • machines for cleaning, sorting, grading or treating seeds, grain or dried leguminous vegetables;
  • trailers and semi-trailers self-loading or self-unloading for agriculture.

The listed equipment is subject to confirmation of conformity in the form of a certificate. During the certification of agricultural machinery or the declaration of industrial tractors, specialists from an accredited laboratory conduct research in the field of performance, fault tolerance, reliability, design and other important characteristics of machines.

In the segment of construction equipment, the certification procedure is mandatory only for lifting and transport equipment, including cranes, the remaining groups of construction machines and equipment, that is, earthmoving, for preparing mixtures, etc., are subject to declaration. To confirm the safety of manufactured equipment, it is necessary to pass tests on various significant indicators for a specific product group.
State support measures

In India, there are a number of state support measures for the purchase of agricultural machinery by farmers. One of the key programs is government decree No. 27 of December 2012, 1432, under which farmers can purchase equipment at a discount. In 2020, this discount was 10% (previously - 25-30%).

According to the Decree of the Government of India dated December 13, 2021 No. 2281, the Rules for granting subsidies to Indian organizations for financial support of part of the costs of developing and organizing the production of new types of products, as well as upgrading the product line, which came into force on January 1, 2022, were approved.

Subsidies are provided under the state program of India ""Development of Industry and Increasing its Competitiveness"" in order to stimulate the production of competitive products of agricultural engineering, engineering for the food and processing industries, the creation of innovative technologies, machinery and equipment in these industries and an increase in investment in research and development and experimental design work. 
...

It is also worth noting the general measures of state support for agricultural producers, which have a positive effect on the activities of enterprises in the industry, and therefore directly on the market of agricultural equipment. These measures include:

  • Compensation for part of the cost of transporting agricultural products,
  • concessional leasing,
  • soft loans,
  • Compensation for part of the costs of certification of agricultural products and others.

Development strategies

As part of the Order of the Government of India dated July 7, 2017 No. 1455-r, the Indian Agricultural Engineering Development Strategy for the period up to 2030 was approved.
The strategy is aimed at achieving the indicators of the Food Security Doctrine of India, approved by Decree of the President of India dated January 30, 2010 No. 120 “On Approval of the Doctrine of Food Security of India”, in terms of the development of modern competitive high-tech equipment of Indian production, as well as ensuring the modernization of agriculture to increase the output of basic agricultural products.

The scope of the Strategy includes the following agricultural machinery used in the production of the main types of crop production, including fodder crops: 

  • agricultural tractors (wheeled and caterpillar);
  • self-propelled agricultural machines (grain harvesters, forage harvesters, root crop harvesters, plant protection sprayers);
  • trailed and mounted agricultural machines (ploughs, harrows, cultivators, seeders, spreaders of organic and mineral fertilizers, trailed forage harvesters, trailed harvesters for harvesting root crops, trailed sprayers for plant protection, forage harvesting machines (mowers, balers, rakes and others) machines), mobile feed mixers and feeders, irrigation machines, machines for specialized sub-sectors of agriculture (hop growing, flax growing, vegetable growing, horticulture and viticulture).

...

Goals and targets of the national project ""Housing and Urban Environment"":
...

Credit policy

Today it is quite difficult to imagine the progressive development of the economy without the active participation of the credit system. It should also be noted that the assessment of the availability of credit resources for both legal entities and individuals is a significant indicator that allows assessing not only the demand for credit funds, but can also serve as a reflection of the real economic situation both in the region and in the economy as a whole.
...

The Government of India is actively working towards the availability of credit funds. As can be seen in the table, the weighted average interest rate in 2016-2021 tends to decrease. Low stable interest rates will allow more confident business planning and consumer spending planning. The positive influence of the factor.

3.5. STEP-analysis of the market of agricultural and construction equipment

Let's present the results of the analysis of factors influencing the market in the form of a STEP-analysis table.

Table 8. STEP analysis of factors influencing the agricultural and construction equipment market

 

Thus, at the moment, the Indian market of agricultural and construction equipment is experiencing a generally positive influence of environmental factors of medium strength.
The negative impact is manifested due to the instability of the situation, determined by the impact of the coronavirus, the decline in economic activity; devaluation of the rupee; a decrease in the population and its real disposable income; the need for product certification; import dependence of components.

A group of political factors positively influence the market, including government support measures, the implementation of development strategies, and credit policy. Also positive factors are the increase in acreage and the pace of construction, new technologies in the industry, depreciation of the fleet of vehicles, the transition of the population to a healthy lifestyle.

Chapter 4. Assessment of the degree of competition 

4.1. Scale of competition (local, regional, national, global)

Consider world statistics on exports and imports for certain types of agricultural and construction equipment in 2020.
...

At the national level, other manufacturers compete with large companies that supply their products almost throughout India. Medium and small Indian engineering enterprises operate, as a rule, at the regional level.

Local small producers do not produce the required volumes in order to compete with players from the two previously mentioned groups of companies. They have a significantly limited market. 
Thus, in the market of agricultural and construction equipment, national and regional types of competition are most pronounced.

4.2. Number of competitors and relative market shares of the largest competitors

The Indian market for agricultural and construction machinery is characterized by a high level of competition.
In India, there are more than 600 foreign market participants and domestic enterprises engaged in the production of agricultural machinery (the main OKVD2 codes were considered: 28.30.2, 28.30.3, 28.30.5, 28.30.7, 28.30.8, etc.), main OKVD2 codes: 28.92.2, 28.92.3, 28.92.4, part of the general code 28.92).
...

It should be noted that foreign manufacturers not only import products, but also produce some types of equipment in India: 
...

Competitor shares are estimated based on data on the volume of imports of agricultural and construction equipment, as well as on the volume of production of domestic companies and factories of foreign manufacturers in India.
The market leader in agricultural and construction equipment is ...

4.3. Competition from substitute products

Substitute pressure in the agricultural and construction equipment market is declining. The relevance of the use of agricultural and construction equipment is explained by the reduction of the terms of work and costs, the increase in labor productivity. However, due to the high cost of equipment, the economic feasibility of its use is limited by the field area or the construction site.
In this regard, the manual labor of teams of workers, and in some cases animals such as bulls, horses and mules (for agricultural work), can replace the types of equipment in question.
Currently, manual machines, mechanisms, fixtures and equipment remain relevant, simplifying and facilitating manual labor and increasing its productivity. 

Chapter 5 Industry Forecasts 

5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)

The financial crisis of 2008 and the geopolitical situation of 2014 caused structural changes in the Indian economy and, despite various prerequisites, had somewhat similar consequences: the volatility of the rupee, a sharp surge in inflation, a decrease in the purchasing power of the population, a decrease in the business activity of organizations, a drop in investment into fixed capital, etc.
...

5.2. Analysis of the impact on the state aid industry at the current date 

Forecasting the development of the agricultural and construction machinery market in India is impossible without understanding the economic situation in the country, as well as the impact of the spread of the covid-19 virus and the measures taken.
The vast majority of the support measures announced by the president and the government concern only the industries that the government has identified as the most affected. That is, benefits apply only to legal entities and individual entrepreneurs whose main activity code (OKVED) specified in the Unified State Register (EGRLE) is included in the government list of such industries.

Agricultural and construction enterprises are not included in the list of so-called affected organizations that suffered financial and material losses from the introduction of the self-isolation regime.

The following table 12 shows the state support measures for companies in the agricultural and construction equipment market in the following areas: 

  • Support measures for agricultural enterprises.
  • Support measures for SME staff.
  • General support measures applicable to all organizations in India.

... 

5.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the market of agricultural and construction equipment

In modern realities, the epidemic of coronavirus infection has seriously affected many familiar processes. The trajectory of the development of the world economy in 2020 has changed significantly. As a result of the widespread introduction of restrictive measures to curb the spread of infection, most of the leading economies have entered a recession. Against the backdrop of a worsening external economic environment and the introduction of quarantine restrictions in the countries that are India's trading partners, economic activity in the Indian economy has slowed down significantly.

The global market for agricultural machinery has encountered natural difficulties in terms of breaking logistics chains and regular supplies of machinery and components. Against the background of the pandemic, the demand for agricultural machinery in the world, as well as purchasing power, have declined. Delays in financing, difficulties with the supply of foreign equipment and spare parts, suspension of the work of some enterprises due to quarantine restrictions are negative stress factors in 2020, to which manufacturers of agricultural machinery had to adapt.
...

Thus, the factors hindering the development of the market are:

  1. Decreased purchasing power of the population.
  2. The current unfavorable macroeconomic situation in the country and in the world. Fundamental uncertainty about the evolution of the pandemic remains the main factor determining the future development of the economy.
  3. The high cost of technology.
  4. Insufficient effective demand from agricultural enterprises.
  5. Rising prices for gasoline, diesel and electricity.
  6. Mandatory product certification.
  7. The need for high start-up capital for organizing the production of agricultural and construction equipment.

5.4. Prospects and growth drivers for the agricultural and construction equipment market

Factors contributing to the growth and development of the market: 
...

5.5. Forecast for the development of the agricultural and construction equipment market in the context of the current economic crisis due to covid-19

In 2020, almost all sectors of the economy felt the effects of the pandemic. 
...

Chapter 6 Forecasting Methodology

6.1. Methods for forecasting key industry indicators

Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and projected general economic situation in connection with the spread of the covid-19 virus. 
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.

6.2. Sources of information for forecasting

  • Industry volume over the past 8-9 years
  • Industry dynamics in 2008-2009, in 2013-2020*
  • Dynamics of macroeconomic indicators over the past 9-10 years
  • Current public assistance plans
  • Databases of the State Statistics Committee of India
  • Indian Revenue Service databases
  • India Customs databases
  • Open sources (websites, portals)
  • Issuer reporting
  • Company websites
  • Media Archives
  • Regional and federal media
  • Insider sources
  • Specialized analytical portals

* Until October 2021 financial indicators for the main market operators and industry coefficients for 2020 - GidMarket forecast based on the dynamics for 2016-2019, except for cases when the operator discloses data on the results of financial 2020 publicly.

6.3. Timing of forecasting

The forecast belongs to the medium-term category - 5 years (2021-2025)

Diagrams

Diagram 1. Dynamics of the market volume of agricultural and construction equipment, 2013-2020, billion Rs.
Diagram 2. The ratio of imported and domestic products in the market of agricultural and construction equipment, 2013-2020, %
Diagram 3. Dynamics of production volumes of agricultural and construction equipment in India, 2013-2020, billion Rs.
Diagram 4. Volume and dynamics of imports of agricultural and construction equipment, 2013-2020, billion Rs.
Diagram 5. Volume and dynamics of exports of agricultural and construction equipment, 2013-2020, billion Rs.
Diagram 6. The share of exports in production, 2013-2020, %
Diagram 7. The largest importing countries by main types of agricultural machinery in value terms, 2016, 2020, %
Diagram 8. The largest importing countries by main types of construction equipment in value terms, 2016, 2020, %
Diagram 9. The largest exporting countries by main types of agricultural machinery in value terms, 2016, 2020, %
Diagram 10. The largest exporting countries by main types of construction equipment in value terms, 2016, 2020, %
Diagram 11. Dynamics of the population of the agricultural machinery industry, 2013-2020, thousand people
Diagram 12. Population dynamics in India, as of January 1, 2012-2021, million people, %
Chart 13. Dynamics of real incomes of the population of India, 2012-2021 (Q3), % to the previous year
Diagram 14. The volume of consumption in the market of agricultural and construction equipment per capita, 2013-2020, Rs./person
Diagram 15. Profitability of profit before tax (profit of the reporting period) in the agricultural and construction machinery industry in comparison with all sectors of the Indian economy, 2015-2020, %
Chart 16. Current liquidity (total coverage) for the agricultural and construction machinery industry for 2015-2020, times
Diagram 17. Compactness of location of companies in the industry in certain regions in 2016-2020, %
Figure 18. Stage of the life cycle of the market for agricultural and construction equipment
Chart 19. Dynamics of India's GDP, 2012-2020, Q3 2021, % to the previous year
Chart 20. Monthly dynamics of the US dollar against the rupee, 2016-2021, Rs. for 1 US dollar
Chart 21. Dynamics of sown areas of agricultural crops in India (farms of all categories), 2012-2020, million hectares
Chart 22. Dynamics of the commissioning of residential and non-residential buildings in India, 2010-2020, thousand buildings
Diagram 23. Population forecast for India, for the period 2022-2025, million people
Chart 24. Age structure of the main types of agricultural equipment in India as of January 1, 2021, %
Diagram 25. The share of construction vehicles with expired service life in the total number of vehicles as of January 1, 2021,%
Diagram 26. Shares of the largest competitors in the market of agricultural and construction equipment in 2020,%
Diagram 27. Forecast of the volume of the agricultural and construction equipment market in 2021-2025, billion Rs.

Tables

Table 1. Types of agricultural machinery
Table 2. Fleet of the main types of equipment in agricultural and construction organizations, at the end of the year, 2016-2020, thousand pieces
Table 3. Key performance indicators of agricultural and construction organizations in 2018-2021 (Jan.-Sep.), units rev.
Table 4. Gross margin of the agricultural and construction machinery industry in comparison with all sectors of the Indian economy, 2015-2020, %
Table 5. Absolute liquidity of the agricultural and construction machinery industry in comparison with all sectors of the Indian economy, 2015-2020, times
Table 6. Projections from various sources of real GDP in India in 2021-2024 (base scenario), %
Table 7. Weighted average interest rates of credit institutions on credit operations in rupees, excluding PJSC Sberbank (% per annum), 2016-2021 (Jan-Oct)
Table 8. STEP analysis of factors influencing the agricultural and construction equipment market
Table 9. World export and import data for selected types of agricultural and construction equipment in 2020, %
Table 10. The main companies participating in the agricultural and construction equipment market in 2020
Table 11. Assessment of the impact of recent crises on the industry
Table 12. Analysis of the impact on the industry of the state aid proposed to date
Table 13. Forecast indicators of the development of the Indian economy in 2021-2024, %
Table 14. Factors of development of the main types of agricultural machinery until 2030
Table 15. Forecast indicators of the project ""Strategy for the development of the construction industry and housing and communal services of India until 2035"", 2021-2025

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