These technological marvels promise not only to rejig farming practices but also to mitigate the industry’s environmental footprint
Climate change is an issue of utmost importance that the world is currently facing and it is a challenge that is complex and multifaceted. Particularly the agriculture sector is vulnerable, as greenhouse gas emissions are being released into the atmosphere, causing extreme weather conditions such as heat waves and floods. This is directly impacting crop productivity and farmers’ livelihoods, which is a significant threat to global food security.
To counter this challenge, we must adopt environmentally friendly cultivation and processing methods. Electric tractors are one of the globally emerging excellent alternatives for future farming. It can reduce farming costs and zero emissions effectively addressing the issue of a sustainable environment and reducing our dependence on imports of crude oil.
As the world’s largest tractor manufacturer, India sells over 1 million tractors annually. However, the adoption of electric tractors has been slower than other electric vehicles (EVs) like two-wheelers, three-wheelers, passenger cars and electric buses. It’s time to take action and promote electric tractors. This will foster an environment for mass adoption and position India as a global exporter of electric tractors. To achieve this, we must integrate electric tractors into incentivised EV policies. It’s unacceptable that no incentives are being offered for electrifying tractors.
Electric Tractors Could be Fetched in FAME-3 Scheme: The FAME-2 scheme (April 2019-March 2024) was a central Government subsidy that aims to promote the Fast Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME). The scheme ended on 31st March, with a total outlay of Rs 10,000 crore to support the production of 7,000 electric buses, half a million electric three-wheelers, 55,000 electric passenger cars and one million electric two-wheelers. However, the scheme excludes electric tractors, which means that manufacturers cannot significantly reduce the cost of producing electric tractors.
The Ministry of Heavy Industries has recently proposed the FAME-3 scheme, which has an outlay of Rs 12,600. The scheme is expected to be implemented after the Lok Sabha elections. Farmers are hoping that the scheme will include electric tractors, which will reduce their costs significantly. With a subsidy of up to Rs 2.4 lakh (capped at 40 per cent of the tractor’s base price), the burden of high purchasing costs on farmers will be greatly reduced.
To promote the use of electric vehicles, several States such as Kerala, Tamil Nadu and Madhya Pradesh offer concessions or a waiver on the road tax between 50 per cent and 100 per cent. Other States, including Delhi, Gujarat, Maharashtra and Rajasthan, offer direct cash incentives on top of the road tax waiver through a similar approach to the central FAME scheme. The incentives range from Rs 2,500 to Rs 10,000 and the subsidy cap ranges from Rs 60,000 to Rs 2.5 lakh, depending on the battery capacity. Punjab and Haryana offer incentives (up to 40 per cent of the ex-showroom price) for e-tractors in their EV policies. Other key agricultural States should consider following this approach to promote sustainable agricultural practices.
Rationalisation of Taxes: Tax rationalisation has proven to be an effective way of promoting electric vehicles through discounted taxes and insurance fees. The existing fiscal incentives provided for zero-emission motor vehicles should be extended to zero-emission tractors as well. While electric vehicles are charged a reduced GST of 5 per cent, e-tractors are still taxed at the same rate as diesel tractors, which is 12 per cent. Additionally, electric vehicles receive a 15 per cent discount on third-party insurance premiums, whereas this provision is not available for e-tractors. The International Council on Clean Transportation (ICCT) has analysed that reducing the GST to 5 per cent or even nil and providing discounted insurance would reduce the cost gap between electric and diesel tractors by almost 40 per cent.
Infrastructure Development: Investing in charging infrastructure for electric tractors, especially in rural areas, is crucial for the rural economy to meet India’s development goals by 2047. Using corporate social responsibility (CSR) funds for this purpose and establishing a charging station network with incentives will ensure widespread accessibility and convenience for farmers.
To increase demand for electric tractors, it’s important to introduce them into custom hiring centres for agricultural machinery. This will help farmers experience the benefits of electric tractors and mitigate challenges related to charging and maintenance.
R&D Investments &Training: Allocating funds for research and development in electric tractor technology can lead to innovation, efficiency improvement and cost reduction. Encouraging collaboration between Government agencies, agricultural research institutions such as the Indian Council for Agricultural Research and the manufacturers would speed up technological advancements in the sector.
Developing and certifying testing and quality assurance standards for electric tractors can attract manufacturers to this sector, addressing supply-side constraints. Institutes like the Central Farm Machinery Training & Testing Institute can set manufacturing, operational and performance standards for various electric tractors based on power output, design and usage purposes. Training and skill development initiatives for farmers, technicians and service providers on electric tractor operation, maintenance and repair are crucial. Empowering stakeholders with the necessary knowledge and skills will facilitate the transition to electric tractors and ensure their effective use in agricultural operations.
Zero Emissions in Electric Tractor: A study by the Ministry of Environment, Forest and Climate Change, reveals that the agriculture sector in India is responsible for almost 14 per cent of the country’s greenhouse gas emissions, with diesel-powered machinery playing a major role. However, electric tractors could be a solution to these challenges.
Currently, most tractors used in India are powered by diesel, which accounts for approximately 7.4 per cent of the country’s annual diesel consumption, equivalent to the amount consumed by buses. While incentives have been introduced to encourage the electrification of buses, no such incentives have been introduced for tractors.
The adoption of electric tractors presents some challenges, such as the initial cost, infrastructure development and promoting their use among farmers. Diesel-powered machinery, notably tractors, accounts for approximately 12-15 per cent of the total cost of agricultural production, which varies by crop type and geographical region. However, electric tractors have many advantages, including zero-emission and a reduction in fuel and maintenance costs due to having fewer moving parts.
According to a study by the Indian Agricultural Research Institute (IARI), electric tractors could reduce maintenance costs by up to 40 per cent over their lifetime, providing a more reliable, environment friendly and cost-effective option for farmers. The Way Forward: India’s tractor manufacturers have developed advanced technology and moved beyond incentives to introduce electric tractors. However, the primary challenge at present is the cost. On-road zero-emission electric tractors cost 40 to 50 per cent more than diesel tractors. This high cost could deter farmers, even though electric tractors are more cost-effective when used in the field. Urgent support from the Government is needed in the early stages of the market to bridge the cost gap between e-tractors and diesel-driven tractors.
Central and State-level incentives would send a positive signal to the industry to invest more in zero-emission tractors. Additionally, this aligns with India’s goal of improving air quality and energy security and has the potential to boost India’s tractor exports. Countries such as the US, Europe, Japan and Canada have implemented strict regulations for tractor emissions and have expressed interest in decarbonising farm machinery.
The global electric tractor market is projected to grow from USD 0.7 billion in 2024 to USD 3.4 billion by 2030, presenting a strategic opportunity for India to leverage its manufacturing capabilities. It can enhance its economic competitiveness, play a pivotal role in achieving net-zero emissions, strengthen the rural economy and shape a sustainable and resilient farm future.
The Author is Vice-Chairman of Sonalika ITL Group, Vice-Chairman of the Punjab Economic Policy and Planning Board, Chairman of ASSOCHAM Northern Region Development Council and President of Tractor and Mechanisation Association (TMA). Views expressed are personal.
