Deere plans to spend $100 million to increase India capacity

Deere & Co., the world's largest maker of farm equipment, plans to spend $100 million to expand manufacturing in India as it expects mechanization to rise in the world's second-most populous nation.

The company will add capacity at its plant in western India to make tractors and build a new factory to make harvesters in the northern state of Punjab, Shailendra Jagtap, a director at John Deere India Pvt. Ltd., the local unit, told reporters in the southern Indian city of Hyderabad today.

Moline-based Deere targets to tap growing use of tractors and other equipment by cultivators in India. Asia's third-biggest economy has a low rate of farm mechanization, with 13 tractors for every 1,000 hectares, less than half the U.S. rate, ICRA Ltd. said last year. The government aims to raise farm loans by 26.6 percent to 4.75 trillion rupees in the financial year started April 1.

“Look at the way the government has increased the minimum support prices for crops, credit flow has increased in the farm sector,” said Mukul Varshney, senior general manager for sales and marketing. “These are key drivers for mechanization to grow at a rapid pace.”

Deere, which today showcased a 60 horsepower tractor it will sell in India, may also start another tractor manufacturing factory in the country by 2013, Jagtap said, without revealing more. Its factory at Pune, in the western Maharashtra state, has a capacity to make 60,000 units a year.