Escorts Kubota bets big on India plant to drive global tractor exports

New Delhi, Aug 22 (AHN) Farm and construction equipment maker Escorts Kubota -- jointly controlled by Japan’s Kubota and India’s Escorts -- plans to significantly expand manufacturing capacity in the country as it targets higher exports to Europe, Africa and eventually North America, according to a report.

A report from Nikkei Asia highlighted Kubota President Shingo Hanada's statement in which he stated that India’s tractor market -- at around 1.5 million units a year -- is by far the world’s largest, compared with about 700,000 units for the rest of the world combined. He said this after the company broke ground this week on a 154-acre greenfield plant in Uttar Pradesh.

The facility -- involving an estimated investment of about Rs 2,000 crore -- will be developed in phases and is expected to become one of Kubota Group’s largest manufacturing sites globally.

Escorts Kubota currently operates manufacturing facilities with annual capacity of about 170,000 tractors and 10,000 construction equipment units.

The new Uttar Pradesh plant will produce tractors, farm implements, construction equipment and engines for domestic and overseas markets.

In the first phase, the facility is planned to add capacity for up to 60,000 tractors and 15,000 construction equipment units annually.

The project will be funded through proceeds from an earlier preferential share issue to Kubota and internal accruals.

Kubota -- which entered India independently in 2008 -- formed its joint venture with Escorts in 2018. Hanada said the earlier standalone strategy didn't go perfectly, but the partnership gives Kubota access to resources that can help it compete with lower-cost tier-2 brands.

Escorts Kubota Chairman and Managing Director Nikhil Nanda said the company has yet to finalise the commercial start date for the first phase but intends to move aggressively.

Hanada said exports from India are very important to Kubota’s future strategy with Europe currently the main focus.

Moreover, India could additionally serve as a sourcing base for components used in Kubota’s manufacturing operations in Japan and the United States. India’s relatively low farm mechanisation rate of 40-45 per cent, compared with about 90 per cent in the US and Japan, presents significant room for growth, according to Nanda.