Introduction: Export or Tractor Parts

The export of Indian tractors has been on the rise since the last decade, as there is huge demand for Indian tractors and several initiatives for increasing exports from India. The Indian Exporters firstly require to obtain an export license from the various departments of the Government of India, depending on the type of goods being exported. However, before proceeding with the licensing of the exporter, the manufacturer requires a pre-defined mindset for the types of tractors to be exported and to whom the products are being exported. In this blog, we will understand the basic requirements of the exports of tractors and their equipment outside India.

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Brief Background Of The Exporting Tractor Market

After the LPG reform the export of tractor has started taking effect, and within a decade India Export of Tractor has increased and there were number of Export players has emerged such as 

• Mahindra Gujarat tractor Limited (MGTL)
• Mahindra Tractors
• Swaraj Tractors
• TAFE
• Mars group
• Preet tractors
• Sonalika
• SAME Deutz-Fahr (India) Pvt. Ltd.
• Standard
• HMT tractors
• Indo Farm
• John Deere
• New Holland Agriculture
• VST tillers
• ACE tractors 
• Agri-king Tractors and Equipment Pvt. Ltd.
• Agri-king Tractors and equipment Pvt. Ltd.
• Captain tractors Pvt. Ltd.
• Crossword Agro Industries
• Eicher
• Escorts
• Farmer Tractor

With time the growth of the domestic Industries in Tractor Manufacturing has remained competitive worldwide, since the last decade the companies have seen vast growth in the international market with the support of various government schemes. However, from the above-mentioned list of tractor manufacturers, only five companies, such as Mahindra, TAFE, ITL-Sonalika, John Deere, and Escorts, acquired 80% of the market share.

Government Initiatives For Export Of Tractors And Its Parts Outside India

The Indian tractor Industry is growing at a large scale as per the recent data from the Economic Survey 2017–18. The Indian tractor industry accounts for about one third of total global production in the tractor market. The Indian tractor industry has created a level playing field in the highly competitive global market of the tractor industry. 

The export of Indian tractors has seen a considerable increase with the help of several government initiatives for the growth of India's export market. The Foreign Trade Policy, 2020, has given a path through the various export promotion schemes, through the introduction of the schemes that are the Merchandise Exports from India Scheme (MEIS)  for the improvement of the export of goods and the Services Exports from India Scheme (SEIS) for the enhancement and ease of the export of services. Additionally, the government has implemented the Interest Equalization Scheme on the pre-and post-shipment rupee export credit to provide cheaper credit benefits to the exporters.

There is another scheme, the Niryat Bandhu Scheme, with the goal of reaching out to new and potential exporters, including micro, small, and medium enterprises (MSME), and through the platform, various programs, sessions, and one-on-one facilitation of services have been launched from time to time. With the boost in exports from India, the foreign trade policy has gotten into international trade.

The Market Access Initiative (MAI) and Trade Infrastructure for Export (TIES) schemes were launched with the objective of promoting exports from India.

The government has launched a central sector scheme, "Transport and Marketing Assistance for Specified Agricultural Products," to provide assistance for the international component of freight and mitigate the freight loss during the export of agricultural products.

Another scheme, the Remission of Duties and Taxes on the Exported Products (RoDTEP) and the Rebate of State and Central Levies and Taxes (RoSCTL) scheme, is launched with the aim of redeeming export taxes for the benefit of new exporters. There is a common digital platform for the facilitation of Certificates of Origin and the increment of Free Trade Agreement (FTA) for the utilization of exporters. The district has been identified for the formation of export hubs with the identification and promotion of diversifying service exports through the defined action plan in each district to support local exporters and manufacturers to generate employment in the district.

International Market Trends Of India’s Made Tractors

The trends of the Indian tractors in the international market have shown great opportunities looking at the significant growth in agricultural tractors. The major importing countries of Indian tractors are the US, Mexico, Italy, Brazil, Argentina, Bolivia, Colombia, Paraguay, Uruguay, Peru, Colombia, Chile,  Peru, Ecuador, etc. The Indian tractor market is the largest market in the world, and with the innovative, technological idea of the investors, now the Indian tractor can be found AI equipped with air conditioning, which requires very little effort in agri-farming and has attracted the international market. This is the great reason for the exponential growth in the export of Indian tractors.

Procedure For Export Of Tractors From India

• IEC & DGFT Registration

Registration from the Directorate General of Foreign Trade (DGFT) is mandatory for the export of goods outside India. The import-export code is provided through registration at the DGFT portal and linking it with the DGFT. The sugar businesses that are being operated through partnerships, proprietorships, limited liability companies,  HUFs, societies, trusts, or even non-registered businesses are all eligible to apply for the IEC.jj

• Sending And Confirming The Export Samples To The Buyer

The exporter is required to confirm and take a letter of credit, as well as documentation against terms and payment, the quality of the goods, and their quantity, from the buyer. 

• Quality Check

Certain countries require a separate authorization of the grade and quality of the product that is being imported into their jurisdiction; the exporter needs confirmation and clearance of the same for the countries in which the goods are being sold.

• Custom Clearance/HS Code Confirmation

The payment of tariffs, taxes, and export duties is mandatory for the export of products outside India. The HS code helps to find out the duty, export duty, or export duty that is paid while exporting tractors outside India after confirmation that the same customs clearance is provided for the exporting goods. The HS code for the tractor and its equipments are comes under Industrial Machinery, Electrical and Engineering items, IC Engine, Machine tools, and Parts, let’s look into the products code

• Certificate of Origin

The applicant or exporter must have the digital signature certificate containing a valid IEC with them and the available digital key software for the filling of the origin certificate. The updated IEC details are at the DGFT web portal regarding the exporter, with the listed director in the IEC portal DGFT. The applicant or exporter must enter the GST number, or if it is in a special economic zone, choose the state and AEO registration number.

• GST Payment

The exporting products (tractors) require GST on the number of goods being exported outside India. The GST rate varies from 5% to 28% depending on the HS code of the tractor. The payment is made by the exporter alone.

Documents Required for Export of Tractors from India

• IEC Registration
• Registered company details 
• Export invoices/ lists
• Types of container (FCL or LCL)
• Bill of lading/AWB
• Export invoice 
• Purchase order/Export packing list
• Certificate of Origin (GSP)
• Authorization /Documents required at the importing country 
• Export custom Clearance 
• Letter of credit (from the importer)

Conclusion

Tractor exports from India have reached 1 lakh units annually in the past year, with destinations including the United States, Brazil, Turkey, Thailand, Bangladesh, Sri Lanka, Nepal, etc. This has been made possible by a number of forward-thinking and successful government initiatives. In order to support micro, small, and medium-sized enterprises (MSMEs) through various adaptation programs, counseling sessions, and personal facilitation, an interest equalization scheme on the export credit of the rupee has been implemented through the loan program. This is greatly assisting investors, manufacturers, and exporters to enter the global market. The Indian government has focused on continents such as Europe, America, etc., and has been focused on increasing export volume and demand, which has made it possible for investors and manufacturers to enter the export business and eliminate their dependency on the market. The Indian tractor manufacturing industry has been growing a diverse range of tractors with variances in horsepower from 30 hp to 120 hp, which has made the Indian tractor business very competitive.