CNH Industrial Says It Is 'Open' To Partnerships In India After Escorts-Kubota Agreement

CNH Industrial, one of the world's top tractor manufacturers, are trying to spread its strength through new product additions, production expansion, and prospective local partnerships in India's $8 billion tractor and farm equipment sector.

The firm, which is India's 6th largest tractor seller, produces tractors in the 50hp and above category under the New Holland brand. It also offers agricultural machinery such as harvesters and post-harvest machines, bringing in roughly $1 billion each year.

The recent deal between the Nanda family-led Escorts and Japan's Kubota set the tone for what the market regards as an aggressive battle for market domination by players. The Indo-Japanese company stated that it aspires to be India's largest tractor manufacturer, surpassing current heavyweight Mahindra & Mahindra (M&M).

When asked if it would like to develop in India through acquisition, CNH indicated it is "open" to partnerships.

"We are absolutely open to it," Raunak Varma, Managing Director, CNH Industrial (India), stated in an interview with BusinessLine. We're interested in collaborating with players who can provide value to the table. For expansion, the majority of Indian OEMs have chosen the inorganic route. Because the barrier to entry is now rather high, international OEMs are acquiring stakes in domestic players."

Varma, on the other hand, stated that the firm is currently not in talks with anybody about forming a partnership, but that the partner must bring important assets to the table, such as competitive production prices. New Holland and John Deere are newcomers to the marketplace that have established their own products and distribution networks in the nation without relying on partnerships.

Brand-New Products

"More than half of the market is made up of products with more than 50 horsepower." The meat of the market is in the 40-50 horsepower bracket, which is where we want to bring products. Over the next three years, we want to treble our current market share of 4%. In 2021, our agricultural business produced a revenue of 6500-7000 crores. "We want to be a $1 billion business shortly," Varma stated.

CNH is investing 350 crore to increase tractor manufacturing by 60% to 80,000 units in the coming year, up from 50,000 last year. Additional product-related investments will be made.

R&D and Export

CNH has established four research and development (R&D) centres in India, one of which is dedicated to construction equipment. In the next two years, the newest one, which is being built in Gurgaon, will become the company's largest in the world, employing 1,000 people.

"We have R&D for tractors in Noida, harvesting in Pune, and construction equipment in Pithampur." "We've now built a global R&D centre in Gurugram, where we aim to centralise R&D from high-cost countries," Varma continued.

Apart from R&D, the corporation wants to establish India as the primary market for utility tractors. CNH has established itself as a market leader in terms of value. CNH sold 14,000 tractors in the export market last year, including 5,000 in the NAFTA market, followed by South Africa and Southeast Asia.

India Offers a Competitive Advantage

CNH intends to supply components manufactured in India to its worldwide sister companies, resulting in greater parts purchases. "Given the supply chain issues we've witnessed, India provides a hedge for the business against China." We're now looking as a group at how we can better exploit India as a 'low-cost nation,' with the initial goal being to buy half a billion more from here. "As of 2021, purchasing would be $600 million, and we want to double that," Varma continued.