Q. Want to understand your perspective on the Indian market as you see it through a global lens; what would be your message to the local Indian manufacturers, how they should transform, how they should be ready to compete with their global counterparts?
Jay: As you know, I work for a global company, CNH Industrial, which is very much present in India. I agree, India is the largest producer of tractors in terms of their size and for the given application. So I believe that the product has to set up the region, you just cannot take it, because the customer is different, applications are different, the environment is different. The product has to serve and suit the needs of the customers. From that perspective fuel will be different, also its quality.
So, in the region and for the region, I believe in that. India is a hub, for example, in electrification and digitization. Talent and technology are available. India can, in many ways, leapfrog the electrification rate, and the adoption of gas technology, or CNG technology, assuming the infrastructure can support them. I know that the electrical infrastructure in India and even in the US and globally is in need of an upgrade.
I would say that India can focus on creating the right product for the region and also try to lead the technology development. Not necessarily follow, make its own path for this. There is a tremendous opportunity for India in the local market and for exports.
Q. As you mentioned, India has all the strengths for the future be it connectivity or digitalization. How do you see yourself as an investor in India? How do you want to leverage the opportunity that India offers for companies like yours?
Jay: We have had a long presence in India. We have three manufacturing plants from CNH. I know that many global companies have a strong presence in India; I’m just CNH. We have one of the best manufacturing plants, in the overall company, in India. The quality of the work that is done and the human resources are very strong. We see this as one of the strengths of the country. We had strategically invested in the R&D Center in Gurgaon and it is a part of our global footprint.
The R&D Center will be a major player in all aspects of our product development. And again, because of the skills and expertise available in the areas that I spoke of makes it an important part, and one of the pillars of our Global R&D Center. We continue to grow there and we continue to have local product development, global engineering, and innovation coming out of the R&D Center in India.
Q. Do you want to further strengthen the R&D team here?
Jay: That is the focus. And that is exactly what is going on, including creating a strong partnership with the local universities. I studied at IIT-Bombay. A lot of research institutions in India are doing tremendous work in innovation. We also see a very vibrant startup culture. And so, once we expand our Technology Center, we will be leveraging all of this for creating a strong ecosystem for us for the overall R&D. And we’re really excited. We as a strong global player are really going to strengthen our R&D presence in India.
India is a hub, for example, in electrification and digitization. Talent and technology are available. India can, in many ways, leapfrog the electrification rate, and the adoption of gas technology, or CNG technology, assuming the infrastructure can support them. I know that the electrical infrastructure in India and even in the US and globally is in need of an upgradeJay Iyengar, CTO, CNH Industrial
Q. Automobile industry is adapting to global megatrends of connected, autonomous, electric, hybrid, etc. How do you see them in the tractor industry?
Jay: Technologies that you spoke of are alternative fuels and different degrees of autonomy. It is here and now. So I know I am before the future.
We are seeing in the market, the different degrees of autonomy, all the way up to Level 3 and Level 4. It all depends on the specific customer use case and the mission that the customer follows. So, we see very strong reception of technology by the customers because they are able to quantify their values. In Brazil, and even in India, natural gas is going to be a very important fuel source. That’s one of the pathways for us to get with the sugarcane available in Brazil. There is a tremendous opportunity to generate natural gas.
In the next five years or so you will see much more mainstream applications of these technologies. Their cost also is coming down. You know, computers have wheels with autonomy and sensing and that is the sophisticated tractor technology today. In many ways it is most of what technology does for the tractors today.
Q. Don’t you think it is easier to adopt electrification or autonomy because tractors largely work in a limited area?
Jay: Technology propagation takes a little bit of time, because you talk about charging infrastructure. It is not there everywhere. There are rural areas, even in the US, where charging infrastructure is not abundantly available. Second you can electrify the large tractors, but it could be impractical in terms of the cost, the size and weight of the batteries and technologies that are needed.
So it’s the combination of the cost points. We believe that below a certain size of the tractors, full electrification, I am talking about battery electric vehicles, will be the sweet spot.
In certain places, certainly, at certain sizes, it will become a hybrid combination of gasoline, diesel engine, and electrification. Depending on what’s available, we clearly see a pathway for CNG and LNG. So I think all three technologies have a role. It depends on the mission of the customer and a customer application.
We do not want to bring a vehicle which is global. Yes, there are elements of it that have to be customized for the applications in India. We normally don’t disclose our product plans, but I think, as soon as the market is ready to receive it. It’s a matter of the market and market acceptanceJay Iyengar, CTO, CNH Industrial
Q. You may spell out a bit in terms of segment, in terms of HP, the size of the tractor, which type of tractor is going to adopt electrification or what kind of tractors are going to have LNG or CNG or hybrid options?
Jay: It’s a big question. You asked about horsepower, like 120 HP and below, and that’s about the range of the compact and specialty tractors used in vegetables and fruits farming. In that type of farming operations, we clearly see a pathway for full electrification because that’s a sweet spot in terms of the size of the motors, KW of the motors, the battery, and the duty cycle, how much range that they need with the full battery and the controllability. Electrification provides a tremendous amount of control grid to help you control the vehicles.
I would say, the economy is not easier if you try electrification with a combustion engine. When you go all the way up to about 400-430 HP range you see hybrids. For the middle range from 120 HP to 400 HP hybrid-electric comes in because of the size of the battery and the mission those vehicles do. For larger tractors CNG and LNG offer a very sweet spot in combination replacing dual fuel type of an approach, where a significant amount of environmental benefits can be had with CNG and LNG.
So, it’s as the technology progresses. If we just fast forward, five years from now, you would have better energy. With the density of the battery technology, I’m very convinced of the cost. Of course, they’re going to come down, even more, and then you can start to see changes.
Q. What are the disruptions and challenges that would transform the tractor industry?
Jay: Just like other areas it’s all about data, it’s all about analytics and the ability to use artificial intelligence. Tractor becomes almost a sensor on wheels. You determine the amount of what would be available. I always say data has no value; it’s the insights from the data that really are the value.
The expectation from the future farmers is that they become more of them and that’s a challenge and the knowhow of the knowledge that they know. Farmers will not be there in the Next Generation. So they focus on technology to help get there.
For us in the industry, the skills that we need to design and develop these products are very different from what they were probably five years ago because of more software, electronics and computing skills that we really need. And then for the maintenance we will have to engage the customer all along the way. It’s one thing to offer an electrified vehicle. We have to make sure that we, our dealers, and our customers understand the product. You know, our dealers are prepared to repair and help with it. So it’s the wide value chain we are focusing on and not just the technology development.
Q. How far are we to see electric and alternative fuel tractors in India from CNH?
Jay: We are ready to go; it’s a matter of the market and market acceptance. And again, we do not want to bring a vehicle, which is global. Yes, there are elements of it that have to be customized for the applications in India. So, we normally don’t disclose our product plans, but I think, as soon as the market is ready to
receive it. You know, we are looking at all of these technologies.
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India’s tractor industry gets 10% of its revenues from exports. In the past 18 months, tractor exports have reached a crescendo and in August 2021, India exported 11,760 tractors, marking one of the highest monthly sales.
“India is largely defined by its small and marginal landholders making up about 85% of all farmers with land sizes of less than 2 hectares. Hence, smart technologies have to be made affordable and accessible for any significant impact on the Indian farming ecosystem,” Hemant Sikka, President, Farm Equipment Sector, Mahindra & Mahindra, said in his keynote address at ETAuto Farm Equipment Virtual Summit.
