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Transition to new emission norms to lead to a rejig in tractors HP-wise mix: ICRA - Tractorgyan

Transition to new emission norms to lead to a rejig in tractors HP-wise mix: ICRA - Tractorgyan

    Transition to new emission norms to lead to a rejig in tractors HP-wise mix: ICRA - Tractorgyan

29 Dec, 2022

  • As per channel check, the new emission norms will result in10-15% cost increase for >50 HP segment which the OEMs will only gradually pass on to the customers

  • OEMs are realigning their product portfolio, with tractors offering higher torque at lower HP being added to the portfolio; the same would lead to some shift in the HP wise mix

The revised emission standards for >50 HP tractors (Bharat Stage TREM IV) are slated to become applicable for tractors from January 2023, even as a big proportion of the overall industry (<50 HP, constituting ~92% of sales in FY2022) would continue to be governed by Bharat Stage TREM IIIA norms. The revised emission norms for the >50 HP segment were initially slated to be implemented from October 2020; the transition was however deferred multiple times, with the Government taking cognizance of industry representations amid the disruption brought about by the pandemic.

Commenting on the impact of the revised norms on the tractor industry, Mr. Rohan Kanwar Gupta, Vice President, Corporate Ratings, ICRA, says, “India remains a medium to high HP tractor market, with ~80% of the sales coming from the 30-50 HP categories. The revised emission norms applicable from January 2023 would apply only to >50 HP tractors, impacting ~7-8% of the overall industry volumes. The technological know-how to meet the revised norms has been readily available with the OEMs as the export models are already meeting the evolved emission norms.

The pass-through of hike to customers is however, expected to be only gradual for the price sensitive farming community. OEMs are in the process of realigning their product portfolio, with tractors offering higher torque at lower HP being added to the portfolio; the same would lead to a shift in HP-wise mix with the 
41-50 HP segment gaining at the expense of the >50 HP segment.”

The emission standards for tractors and construction equipment are regulated separately from the broader automobile industry in India. While significant progress has been made in the regulation of on-road vehicles over the years, especially with the expected implementation of BS-VI norms (from April 2020), the emission control regulations for non-road vehicles have been less stringent and lag the norms implemented in developed countries. The revised emission norms would result in a material reduction in the emission rates of particulate matter in particular for the >50 HP segment.

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Recently Asked Question about Transition to new emission norms to lead to a rejig in tractors HP-wise mix: ICRA - Tractorgyan

What are the revised emission norms for tractors in India?

The revised emission norms for tractors in India are Bharat Stage TREM IV. These norms are aligned with BS IV norms and are applicable to all tractors with an engine capacity of 50 hp and above.

When do the revised emission norms come into effect?

The revised emission norms for tractors came into effect on January 1, 2023.

How will the revised emission norms impact the cost of tractors?

The revised emission norms are expected to result in a 10-15% increase in the cost of tractors for the >50 HP segment.

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