Indian tractor maker plans expansion in Africa, tap land bank

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Aparajita Gupta | 06 Mar, 2014
Indian tractor manufacturer Sonalika International, which annually exports 6,000 units to Africa, is planning to add two more assembly plants to build on the three existing facilities in order to tap the potenial of the huge unutilised arable land bank of the 54-nation continent.

"We are planning to add another two assembly plants by this year. We are looking at options in South Africa and in the East African countries," Rajiv Wahi, senior president, international business, International Tractors Ltd, a Sonalika Group Company, told agency in an interview.

The company has three existing assembly plants in Cameroon, Nigeria and Algeria. The investment needed to set up any assembly plant depending on the capacity, volume and localization would be between USD 5 million and USD 20 million.

Africa is nine times the size of India but the continent has 60 percent of unutilised arable land. The continent still depends on very basic agricultural methods. Africa is a net importer of agricultural products.

Talking about the immense opportunities that the continent offers, Wahi said: "Today one of the biggest challenges facing us globally is food security. Africa is one of the prime regions that can offer solutions for global food security. Africa needs 100,000 tractors today. So already there is a deficit of 70,000 tractors in the continent."

India has the pioneering position in the tractor industry in Africa due to cost and durability factors.

"In agriculture, Africa is today where India was 30 years back. Our knowhow and expertise are very relevant for Africa. In the early 1970s, India's tractor market was around 30,000-40,000 annually and during that time India was a net importer."

"Today India has become the world's biggest tractor market. India manufactures about 700,000 tractors every year and globally it is 1.8 million. Hence, India manufactures 35 percent of the global production," Wahi said.

He said in the next 30 years, Africa's requirements are bound to multiply, not grow by a few percentages.

Sonalika, which started exporting to Africa 11 years ago, is now present in around 30 countries on the continent.

"What needs to be done in the long-term is to put up agriculture training centres to develop the skills of the people rather than just giving them equipment.

"Agriculture needs irrigation, better seeds, land consolidation, logistics, storage and agro-processing. But the whole eco-system is missing out there. Alone a tractor cannot bring Green Revolution. The knowledge gap is too huge," Wahi explained.

All Indian, Chinese and European tractor brands are present in Africa. "European products are very hi-tech; Chinese products are relatively cheaper but much lighter in terms of suitability. Indian products are the most adaptable for Africa," Wahi noted.

India and Africa share the same population numbers - 1.2 billion. "But we are self-sufficient. Africa is moving in the right direction but at a slower pace. It is important to engage companies and governments alike in agriculture."

Saying that Africa has similar fragmented landholdings as in India, Wahi added: "Ninety percent of tractors are based in five countries - South Africa, Algeria, Morocco, Tunisia and Egypt - in a continent of 54 nations. These countries have more than 20,000 tractors. The rest of the countries have only a couple of hundreds."