On this World EV Day, India has a lot to celebrate and look forward to.
The country, which surpassed Japan to become the third largest auto market globally this year, has already witnessed a stupendous growth of over 200% from CY 2021 to CY 2022 in its EV sales. These include not only electric two-wheelers and three-wheelers, but also electric cars and SUVs.
That said, there still exists categories of transport vehicles - both on-road and off-road - that are conspicuous by their absence in this electrification journey of India.
A key category left out of the EV revolution in India is tractors.
In a predominantly agrarian economy like India, tractors play a crucial role, and it's high time they become part of the EV transformation.
The Importance of Tractors
India ranks among the top three tractor exporters globally, with 1,24,542 tractors exported during FY 2022-23 (Tractor and Mechanization Association). Yet, diesel remains the primary fuel for tractors in India.
Agricultural tractors accounted for more than 2.6% of the total diesel sales in India between October 2020 and September 2021, a figure eclipsed by buses at 4.1%. This however still needs immediate attention given the fact that there are ~90 lakh agricultural tractors in India against just 12 lakh buses on roads in India right now.
Moreover, many tractors are used for non-agricultural purposes, including transporting construction materials and people in rural areas.
The case for electrification gains momentum considering that a significant majority of Indian agricultural tractors have engines between 19 and 37 kW, making them exempt from BS IV emission standards.
Furthermore, a shift from a rental to an ownership model among small landowners is expected to drive the E-tractor market in India. With more than 30% of tractor exports in FY 2022-23 heading to the United States, where demand for compact E-tractors is growing, entering the E-tractor market presents a profitable opportunity for foreign trade.
The Advantages of E-tractors
A total cost of ownership (TCO) analysis suggests potential savings of up to 30% over a period of five years compared to diesel tractors.
E-tractors also require minimal maintenance and servicing. Unlike electric cars or trucks, E-tractors do not face range anxiety issues, as they operate primarily on smaller farms, covering shorter distances.
The Indian tractor industry's introduction of E-tractor prototypes, even in the absence of subsidies and infrastructure, is commendable.
Manufacturers such as Escorts, Sonalika, and Cellestial have embraced electrification technology, while Tube Investments of India, known for electric three-wheelers, has ventured into E-tractors.
However, high manufacturing costs and consequently, high selling prices have hindered widespread adoption. The absence of manufacturing incentives and purchase incentives further discourages big tractor manufacturers.
Government Initiatives
In the past, government incentives like FAME-I and FAME-II played a pivotal role in boosting the adoption of electric two-wheelers. Now, the industry calls for similar support through FAME-III, which is anticipated to have a substantial corpus of approximately INR 50,000 Crore.
This time, the industry is seeking enhanced purchase and tax incentives, and incentives for newer categories like trucks and off-road vehicles used in agriculture, mining, and construction.
Some states, such as Telangana and Haryana, have already taken the initiative to offer incentives on E-tractors under their state EV policies. However, these initiatives should be integrated into central schemes like FAME to ensure uniform support across the country.
The central government, along with various state governments, already provides subsidies ranging from 20-50% (or even higher, as seen in Assam) for purchasing new diesel tractors for farming. Extending these incentives to E-tractors under FAME would drive their adoption in farms of all sizes.
Achieving cost parity, a critical factor in this segment, depends on direct purchase incentives that align with E-tractor prices compared to diesel counterparts. Coupled with accessible charging infrastructure, subsidized electricity rates for home charging (similar to those for agricultural activities), and reduced-interest loans (or rates similar to those for diesel tractors), the E-tractor market can thrive.
It is imperative that E-tractors become part of forthcoming government schemes like FAME-III and other incentive plans. Their inclusion will not only benefit the agricultural sector but also contribute significantly to India's electric vehicle landscape. The time has come for electric tractors to receive the recognition they deserve in India's electrification journey.
(As Lead, the Centre for Clean Mobility, the author oversees the electric mobility practice at OMI Foundation. Her areas of work include electric mobility-related policy research and strategic engagements and championing sustainability through analysis of clean energy practices and providing actionable insights for adoption of the same.)
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