A multi-faceted joint venture will see Japan’s Kubota and Escorts of India jointly developing and manufacturing utility tractors that will be sold to Indian farmers by both companies and exported by Kubota to selected markets around the world. Kubota will have 60% ownership of the manufacturing joint venture, which is said to have an initial capacity of 50,000 units and the resources to jointly develop new products.
Kubota and Escorts, India’s third largest farm equipment maker, have agreed to create a new brand, “E Kubota,” under which they will market tractors in Eastern Europe, Africa and other regions, from this year.
Demand for agricultural equipment is expected to grow in emerging markets as farming becomes increasingly mechanised.
According to the company, this will be a win-win collaboration and benefit. Escorts from product innovation through indigenization of global R&D, production systems excellence, global supply chain, sales and distribution and act as a global sourcing hub for Kubota.
Nikhil Nanda, Chairman and Managing Director, Escorts Ltd., said, “We are pleased to partner with Kubota to offer farmers with innovative solutions and thereby maximize productivity for profitable growth in domestic and export geographies. This collaboration aims at leveraging R&D strengths of Kubota to offer cutting-edge products for domestic and export markets, serving customers in new markets and new product lines.”
Kubota forecast that tractors sales in emerging markets will total 1.9 million units by 2027, of which nearly 70% or 1.25 million will be low-priced machines. Of an expected sales increase of 500,000 units in about 10 years, low-priced tractors will account for 400,000, the company said.
The number in India will increase to 880,000 units from 520,000 and to 420,000 units from 230,000 units in Africa accordingly.
Growing demand for food in emerging economies is stimulating demand for tractors. According to the Japanese Ministry of Agriculture, Forestry and Fisheries, global demand for food in 2050 will likely increase to 5.8 million tons, 1.7 times the level in 2010. In particular, demand in emerging market nations and developing countries is forecast to double.
Yuichi Kitao, President and Representative Director, Kubota, Japan, said, “Through this collaboration, we believe that we will cater to India and other growing economies which require high-end technology and new age tractors to address growing demands of highly mechanized farming. Kubota and Escorts, together, with their leadership in respective geographies will consolidate strengths and technology innovation excellence to emerge as a global leader.”
The company will focus on new avenues of growth in construction equipment and agriculture implements, leveraging the strengths of both parties, with a focus on products including earthmoving equipment & smart agriculture implements.