Transition To New Emission Norms To Lead To A Rejig In Tractors HP-wise Mix: ICRA

The revised emission standards for more than 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 (more than 50 HP, constituting 92 per cent of sales in FY2022) would continue to be governed by Bharat Stage TREM IIIA norms. The revised emission norms for the more than 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, Rohan Kanwar Gupta, Vice President, Corporate Ratings, ICRA, says, “India remains a medium to high HP tractor market, with 80 per cent of the sales coming from the 30-50 HP categories. The revised emission norms applicable from January 2023 would apply only to more than 50 HP tractors, impacting seven to eight per cent 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 more than 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 more than 50 HP segment.