Farm mechanisation in India has left its small farms behind
SRF Capital Studio Research DeskFunding Intelligence, SRF Capital StudioIndia sells more than ten lakh tractors a year, while most of its farms are too small to keep one busy.
Summary
- India's mechanisation level of 47% is an average that mixes Punjab's machine-dense fields with hill farms that have almost no engine power.
- Small and marginal holdings, 86% of the total, cannot justify owning machines, and the subsidy, credit and dealer systems built around owners reach them weakly.
- Machines reach small farms when they can be hired by the hour and are sized for small plots and the jobs still done by hand.
Picture a family farming one hectare, close to India's average holding. A neighbour's tractor ploughs their field in an afternoon, for a fee. After that they transplant, weed and harvest by hand, or pay labourers to. In the national figures, their farm counts as partly mechanised.
India's machine power is growing, but it is unevenly spread: by state, by crop, by farm size and by who does the work.
How mechanised are India's farms, crop by crop?
Parliament's Standing Committee on Agriculture reported in July 2023 that 47% of farm activities were mechanised, as of August 2022. In its comparison, China stood at 60% and Brazil at 75%. At the current pace, the committee said, reaching 75 to 80% would take India about 25 years.
Level of farm mechanisation in India by crop, August 2022
| Crop | Share of farm activities mechanised |
|---|---|
| Wheat | |
| Rice | |
| Pulses | |
| Sugarcane | |
| All farm activities |
Wheat leads by a wide margin. Pulses and sugarcane, which still need far more hand labour, trail. The crops a family grows decide how much of its work a machine can take.
Where in India is farm power concentrated?
Farm power availability is the engine and motor power on farms, counted in kilowatts per hectare. It is the usual yardstick of how mechanised a region is. The committee put the national average at 2.5 kW per hectare and asked for 4 kW by 2030.
Punjab had 6 kW per hectare and Mizoram 0.7, a gap of more than eight to one. The committee also found that no formal state-by-state study of mechanisation had been done, and asked for one. Until it exists, targets are set against an average that no single state resembles.
Punjab's question runs the other way: why a state this mechanised keeps buying tractors. Our Punjab piece takes that up.
Why can't a small farm justify owning a machine?
Size is the first barrier. India had 14.6 crore operational holdings at the 2015-16 Agriculture Census, the latest with published results. About 86% were under two hectares, and together they farmed roughly 47% of the land. The average holding was 1.08 hectares.
A machine earns its keep by working many hours a season. On one hectare it works a few days and stands idle for the rest. The owner pays for it either way.
What owning a mid-size tractor costs a small farmer each year, an illustration
| Step | Amount |
|---|---|
| Price of a 2WD tractor, 20 to 40 pto hp (illustrative) | ₹7 lakh |
| SMAM subsidy at 50%, before the cap | ₹3.5 lakh |
| SMAM cap for this class, small and marginal farmers | ₹3 lakh |
| Farmer's share after the capped subsidy | ₹4 lakh |
| Spread over ten years, before interest, fuel and repairs | ₹40,000 a year |
| Per hectare on a 1.08-hectare farm | about ₹37,000 a year |
The cap matters as much as the rate. A 50% subsidy sounds like half the price, but on this tractor it pays 43%. What remains is a fixed charge the farm carries whether the tractor works ten days a year or a hundred.
What keeps small farmers from loans, dealers and subsidies?
A tractor loan usually asks for clear land records or a guarantor. Tenants, sharecroppers and families with disputed titles stall at that first step. So do many women farmers, because land is usually recorded in a man's name.
Dealers and workshops cluster where sales are strongest. A farmer far from one loses days when a machine breaks in season. That lost time cuts the value of owning even where the money can be found.
Subsidy reach is thin as well. SMAM, the main central scheme, has subsidised 21.61 lakh machines for individual farmers since 2014-15, the government said in July 2026. Individual beneficiaries rose from 2.07 lakh in 2020-21 to 2.32 lakh in 2024-25.
Set that against roughly 12.6 crore small and marginal holdings. Even if every beneficiary in 2024-25 had been a small farmer, the scheme would have reached fewer than 2 in every 1,000 such holdings that year.
Ownership subsidies cannot close a gap of this size.
Which farm jobs in India are still done by hand?
Machines came first for the heavy jobs: ploughing, threshing and hauling. The jobs left by hand are the fiddly ones, such as transplanting rice seedlings, weeding, picking cotton and sorting produce. Women do much of that work.
Much farm equipment has also been sized for men's height and strength. ICAR runs a Central Institute for Women in Agriculture that develops tools for these tasks. SMAM now earmarks 30% of its funds for women farmers, according to the July 2026 backgrounder. That money helps only if the machines on offer suit the jobs women do.
How do machines reach a one-hectare farm?
Hire, do not own. A farmer who rents a machine for a day pays for that day alone. That is why SMAM pays hiring centres 40% of project costs on projects up to ₹250 lakh, and village machinery banks 80% up to ₹30 lakh.
By February 2026 the scheme counted 27,554 custom hiring centres, 25,608 farm machinery banks and 646 hubs for high-value machines. Small and marginal farmers in low-mechanised regions can also claim ₹2,000 per hectare, on up to two hectares a year. Under the guidelines revised in August 2026, it pays for drone services hired from centres or women's self-help groups. How well farmers actually use the centres is the subject of our piece on custom hiring centres.
Size the machine to the plot. A walk-behind transplanter or a power weeder fits a one-hectare farm better than a 50 HP tractor, and both are already on SMAM's subsidy list. Harvesting machines are where India still imports most, as our note on machinery imports shows.
Credit can widen the door as well. Crop sale records, PM-KISAN payment history and membership of a farmer producer organisation all say something about whether a farmer can repay. A lender that scores them could finance hire-purchase that title-based loans leave out.
Where should a founder or investor look in farm mechanisation?
The unserved demand sits in services and small machines more than in tractors. A rental operator, a maker of small implements or a lender that underwrites hiring centres sells into the 86% that tractor showrooms rarely see. Each depends on scheme money at some point, so scheme matchmaking is a sensible first step.
How investors and lenders fund this part of the farm economy is covered in funding food and agriculture in India. Our agritech practice works with founders building for these farms.
Frequently asked questions
What is the level of farm mechanisation in India?
47% of farm activities as of August 2022, according to Parliament's Standing Committee on Agriculture. Wheat was 69% mechanised, rice 53%, pulses 41% and sugarcane 35%.
What is the status of farm mechanisation in India?
Uneven. Domestic tractor sales passed 10.9 lakh in 2025, by the Tractor and Mechanization Association's count. Punjab has 6 kW of farm power per hectare, while Mizoram has 0.7 kW. Small farms depend mostly on hired machines for heavy jobs and on hand labour for the rest.
What are the challenges of farm mechanisation in India?
Holdings too small to keep a machine busy, loans tied to land title, dealers concentrated where sales are high, and machines built for heavy jobs more than hand jobs. Subsidies are capped per machine and reach a small share of farms each year.
How can farm mechanisation reach small and marginal farmers?
Through hiring in place of owning, machines sized for small plots, and credit that reads a farmer's cash flow as well as land records. Subsidy for hired services, such as SMAM's ₹2,000 per hectare for hiring drones, spreads further than subsidy for ownership.
What is farm power availability in India?
About 2.5 kW per hectare on average, per the Standing Committee's 2023 report, against a target of 4 kW by 2030. Punjab had 6 kW per hectare and Mizoram 0.7 kW.
Figures as at October 2026. The 2021-22 Agriculture Census had not published holding results by July 2026, so holding figures are from 2015-16.
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