The revised emission standards for above 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 (Greater than 50 HP, constituting 92% of sales in FY22) would continue to be governed by Bharat Stage TREM IIIA norms.
These emission norms for the above 50 HP segment were initially slated to be implemented in 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.
Rohan Kanwar Gupta, Vice President, Corporate Ratings, ICRA, said, “India remains a medium to high HP tractor market, with 80% of the sales coming from the 30-50 HP categories. The revised emission norms applicable from January 2023 would apply only to greater than 50 HP tractors, impacting approximately 7%-8% 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 the price hike to customers is expected to be only gradual for the price-sensitive farming community. As Gupta explained, 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 greater than the 50 HP segment.
Notably, 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 regulating 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 behind 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 above 50 HP segment.