Transition to new emission norms in tractor industry unlikely to be major disruptor: Icra

The transition to new emission norms in the tractor industry is unlikely to be a major disruptor as it would apply only to vehicles with engine capacity higher than 50 HP, impacting around 10 per cent of the overall industry volumes, according to ratings agency Icra. From April 2022, the new TREM IV emission norms will be applicable to tractors with engines bigger than 50 HP, while a big proportion of the overall industry of less than 50 HP will continue to be governed by TREM III A norms.

At present, TREM III A emission norms are applicable for tractors across various horsepower (HP) categories in India and were implemented in April 2010/2011, Icra said in a statement.

“India remains a medium to high HP market, with around 80 per cent of the sales coming from the 30-50 HP categories. The revised emission norms would apply only to higher than 50 HP tractors, impacting only around 10 per cent of the overall industry volumes,” Icra Vice President & Sector Head, Corporate Ratings, Rohan Kanwar Gupta said.

Technological know-how is readily available with the OEMs as the export models are already meeting the evolved emission norms, he added.

On the impact on tractor prices, Gupta said, “In our estimates, the cost increase because of new emission norms will be in the range of 6-8 per cent, which the OEMs will only gradually pass on to the customers”.

In addition, he said, 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 could lead to a shift in HP wise mix with the 41-50 HP segment gaining at the expense of the over 50 HP segment,” Gupta added.

The revised emission norms for tractors were earlier slated to be implemented from October 2020. It was, however, initially deferred by one year and subsequently by another six months in the wake of the coronavirus pandemic.