It is a little over four months since CNH went in for a global leadership reshuffle which included the India operations and saw Narinder Mittal elevated as President. He had joined CNH in 2016 and was its Country Manager and Managing Director till the recent change in designation came along.
“CNH probably feels India has a chance to grow at the same pace, as China did in automobiles, in its agriculture sector at least for the next two to three decades,” Mittal told ETAuto in a recent interview.
According to him, at a recent meeting with the CNH global leadership, the message that came through loud and clear was to grow in India and not “miss the bus”. The company plans to invest “at least $130 million and much more” over the next five years towards projects and infrastructure development initiatives.
CNH is also looking at leveraging its presence in India through a four-pillar strategy. The first is for the domestic market where growth will lead to scale and make the business competitive. The second pillar focuses on developing tractors and other equipment like sugarcane harvesters for exports. The third pillar is using design competencies in India both for local and global products. This is where the India Technology Centre in Gurugram near Delhi will play a bigger role in the years to come. Finally, the fourth pillar of the CNH strategy lies in using India as a supply chain base.
Sourcing plans
“We plan to source $200 million worth of additional components out of India going forward. This will become a reality in a year or so since we are already working with suppliers,” says Mittal. A warehouse management system, also referred to as the world manufacturing floor, will be part of the global supply chain effort.
“The first step is $200 million worth of components which will then be scaled up,” he adds. Some parts will be moved from China to India and others shifted from the West to this part of the world. “Having faced problems during COVID, when the supply chain crippled worldwide, nobody wants to take a risk,” he explains.
It puts in perspective why India is now being created as a backup region though it will, in reality, assume a larger role going forward. “Of course, we have to watch out for certain things like the quality level and consistency (of parts),” he cautions.
All checks and balances are now being put in place so that “we do not suffer” in areas that have plagued multinational companies in the past. The good thing is that India’s component industry has evolved over the years and the overall supply chain is robust.
Global suppliers
Even for the domestic market, CNH has opted for global suppliers like Dana Graziano (for gearboxes and drivelines) and others which deliver quality products. “So that is the level of confidence this team has when it comes to buying good quality products consistently. This supply base can also deliver the same components to global plants,” says Mittal.
Additionally, the India Technology Centre will play a key role in R&D quite unlike the not-so-distant past when the country virtually had little to contribute to global R&D needs. Work has now begun in designing for global products in the CNH stable. This was “unthinkable” a couple of years ago but Indian engineers are now working on “bigger tractors and products” which may not even be launched in India during the following decade.
Mittal is categorical that the growing role of India has little to do with the overall cost structure being lower than the US or Europe. “If you are doing something in India, eventually you know it will be competitive when compared with engineering centres elsewhere. However, cost is only a byproduct since we also have enough availability of skilled manpower. Two, it is always difficult to hire so many competent people in one location,” he explains.
Global pivot
Nearly 700 engineers are now employed at the tech centre, making India some kind of an anchoring setup across the CNH world. For sure, it is cost-competitive here but this is not the sole reason for the focus on the tech centre. Going by that logic, CNH “would stop everything in the US and Europe and start doing them in India”.
There is a freeze on hiring at the tech centre following the slowdown in the global agriculture market. “There is a downturn and since we cater to worldwide needs, hiring has stopped. We would have otherwise had 1,000 people on the tech centre’s rolls this year itself. We may begin hiring during the second half of next year,” says Mittal.
CNH has plants in Pune (for harvesting and post-harvesting equipment), Noida (tractors and engines) and Pithampur for construction equipment. Pune also caters to manufacture of tractor cabs which were being imported from Europe earlier. Rotavators will now roll out from this facility next year.
Thus far, CNH has just has not been able to make a significant dent with its New Holland tractor brand in India despite its long tenure of over two decades. This is a segment where the likes of Mahindra & Mahindra, TAFE, Sonalika and Escorts rule the roost. CNH, in contrast, remains a marginal player though Mittal says there is now a bigger plan in place.
New tractor models
“We launched two products: 35 hp Smart and 39 hp Smart last year. Both products found good traction on the ground and our market share in this product category has grown,” he continues. As a result, the New Holland brand has “actually crawling upwards” with plans underway to work on the network and product range so as to double the market share over the next four years.
This will be done based on the Trem V emission norms, applicable to tractors, that will kick in from April 2026. Consequently, CNH hopes to have “good traction” for tractors in the 40-50 hp range as well. Beyond this, the company will begin focusing on those markets where it has not been traditionally very strong. These include Uttar Pradesh where its market share is “very modest” while there is good potential for improvement in Maharashtra and Madhya Pradesh.
Punjab and Haryana are seeing better growth already and Mittal says it is now important for the customer to get his desired product given that the company has the entire product range starting from the compact 18 hp to 200 plus hp tractors.
Those tractors above 110 hp are imported with the rest are made locally. CNH recently launched the New Holland Workmaster 105 hp tractor which was earlier being exported to the US from its Noida plant near Delhi. “We launched it in India since this tractor is required for big baler applications and will help the farmer,” says Mittal.
Compact tractor for US
A compact tractor is also in the works through a tie up with LS Tractor of South Korea. It will be made in India but earmarked for the US. As of now, the Indian market does not need this product which is compact for the US but still large in India where farm holdings are a lot smaller.
As for cleaner fuel options, CNH already has a 160 hp methane tractor which can be “at least explored” as a possible launch for India sometime in the future. It will also look at other alternatives but the key is to have the infrastructure in place first.
Apart from tractors, CNH is betting big on its New Holland combine harvesters where it sees tremendous potential in areas like sugarcane. “I think we should be doing record volumes this year and cross 350 sugarcane harvesters. India has a lot to gain from mechanisation in the harvesting area. Sugarcane yield improves by nearly 10% using the mechanical harvester,” he says.
Promoting mechanisation
CNH is working closely with sugar mills in Uttar Pradesh to promote mechanisation and improve yields. Likewise, in post-harvesting, the company sees good traction on the ground for its balers. According to Mittal, the end user needs to know more about the equipment that can be used to improve productivity and yield. The exceptions are farmers in Punjab who have had the “privilege of travelling across the globe”. They have seen farming practices in the US and Australia and buy similar equipment back home in India.
Global acquisitions of companies like Hemisphere and Raven have helped CNH in the field of precision technology where the biggest beneficiary will be the farming sector in terms of higher yields. The India tech centre is also expected to do its bit here for farmers when it comes to providing affordable solutions. “So we are using local and global sources for hybrid solutions that will help Indian farmers,” says Mittal.
