Current Policy Interventions for Promoting Farm Mechanization in India

India’s farmers feed over a billion people, yet more than 86% of them operate on holdings smaller than two hectares – plots too small to justify owning expensive machinery. The result? Many still rely on manual labour for operations that could be done faster, cheaper, and more efficiently with machines. Recognising this as a structural bottleneck to agricultural growth, the Government of India launched the Sub-Mission on Agricultural Mechanization (SMAM) in 2014-15 – a dedicated policy intervention aimed at transforming how Indian farmers access, use, and benefit from modern farm equipment.

Why farm mechanization matters for India 🔗

Mechanization is not just about replacing human effort with machines. It directly affects the efficiency of every other input – seeds, fertilizers, water, and time. Agricultural mechanization optimizes the use of land, water, energy, manpower, and inputs like seeds and pesticides to maximize productivity across cultivable areas. It also makes farming more attractive as a profession, which matters in a country where the agricultural workforce is steadily shrinking due to rural-to-urban migration.

Despite the clear benefits, India’s overall farm mechanization currently stands at around 47%, compared to 60% in China and 75% in Brazil. States like Punjab and Haryana report mechanization levels of 70-80%, while northeastern and hilly states still record negligible rates. This sharp regional disparity, combined with fragmented landholdings, makes equitable mechanization a major policy challenge. Experts estimate it could take around 25 years to achieve 75-80% mechanization at the national level – unless targeted interventions accelerate the pace.

The SMAM scheme: scope and structure 🔗

The Sub-Mission on Agricultural Mechanization was launched by the Ministry of Agriculture and Farmers Welfare in 2014-15, with the specific objective of promoting mechanization among small and marginal farmers and in regions where farm power availability is low. The scheme operates on a 90:10 cost-sharing model between the central and state governments, making it a collaborative federally-funded initiative rather than a top-down mandate.

Since its implementation, the government has released Rs. 6,748.78 crore to state governments, distributed over 15.75 lakh agricultural machinery and equipment, including tractors, power tillers, and plant protection equipment. These figures reflect the scale of the scheme’s reach – but the real story lies in how it is structured to serve those who need it most.

Who is eligible? 🔗

SMAM’s eligibility framework is deliberately inclusive. Individual farmers, Self-Help Groups (SHGs), Farmer Producer Organizations (FPOs), cooperatives, and rural entrepreneurs are all eligible. Priority is given to small and marginal farmers, women farmers, Scheduled Caste/Scheduled Tribe farmers, and those in the North-Eastern region. Agricultural universities and Krishi Vigyan Kendras (KVKs) can also participate in training and capacity-building activities under the scheme.

Key policy components of SMAM 🔗

Financial assistance for machinery purchase 🔗

One of SMAM’s most direct interventions is subsidized access to farm equipment. The scheme provides a 50% subsidy for SC/ST farmers, women, small and marginal farmers, and those in the North-East; other categories receive a 40% subsidy on machinery costs. This applies to a wide range of equipment – from tractors, power tillers, and combine harvesters to seed drills, sprayers, and crop reapers. For Post-Harvest Technology (PHT) units, an additional financial ceiling of Rs. 1.25 lakhs per machine is provided to encourage adoption beyond the field.

Establishment of Custom Hiring Centres (CHCs) 🔗

For a farmer with two acres of land, owning a tractor makes no economic sense. This is where Custom Hiring Centres become critical. CHCs are facilities from which farmers can rent agricultural equipment – tractors, harrows, rotavators, seed drills, threshers, and sprayers – at affordable rates, and can be run by farmers, FPOs, cooperatives, gram panchayats, or private entrepreneurs. Under SMAM, CHC operators receive a financial assistance of 40-50% of the project cost.

As of the latest parliamentary review, over 37,097 custom hiring centres, including 17,727 farm machinery banks, have been established across the country. A well-functioning CHC typically serves 100-200 farmers in its vicinity, dramatically reducing the cost burden of individual machinery ownership. The model also promotes rural entrepreneurship – agri-graduates and rural youth can set up CHCs with government support, creating self-employment while serving the farming community.

Hi-Tech Hubs for high-value machinery 🔗

Beyond basic equipment, SMAM also supports the creation of Hi-Tech Hubs that house high-value, precision machinery not typically accessible to ordinary farmers. These hubs aim to create centralized access points for advanced equipment, making it possible for even resource-constrained farmers to benefit from precision agriculture tools. States like Andhra Pradesh and Tamil Nadu have established dozens of such hubs, particularly to serve large cluster-farming areas.

Farm Machinery Banks (FMBs) for village-level access 🔗

Village Level Farm Machinery Banks (VLFMBs) function on a similar model as CHCs but are positioned closer to the ground – at the panchayat or village level. Special emphasis is given to establishing FMBs in hilly areas, where terrain makes large machinery impractical, to reduce the physical burden on women agricultural workers in particular. For FMBs set up in selected villages, financial assistance of up to 80% of the project cost is provided – the highest support ratio in the entire scheme.

Training, testing, and demonstration 🔗

Owning or renting a machine is only useful if a farmer knows how to operate and maintain it. SMAM includes a dedicated component for training and demonstration activities – ensuring performance testing of agricultural machinery at certified testing centres, capacity building of farmers and end users, and promoting mechanization through field demonstrations. Krishi Vigyan Kendras (KVKs) and state agriculture departments are key delivery partners for this component.

Equally important is the performance testing and certification of machinery. Not all equipment sold in rural markets meets quality standards. SMAM mandates performance testing and certification of agricultural machines at designated testing centres located all over the country, protecting farmers from purchasing sub-standard equipment even with subsidy support.

Post-harvest technology support 🔗

Mechanization under SMAM does not stop at the field boundary. The scheme also includes financial support for post-harvest technology – covering processing, value addition, low-cost scientific storage, transportation, and crop by-product management through demonstrations and capacity-building activities. This is significant because post-harvest losses in India remain high, and reducing them has a direct impact on farmer income.

Special focus on the North-Eastern region 🔗

The northeastern states have historically had the lowest levels of farm mechanization in the country. To address this, SMAM extends financial assistance of up to 100% (capped at Rs. 1.25 lakhs per beneficiary) for farmers in high-potential but low-mechanized states of the North-East. This is the most generous support tier in the scheme and reflects a deliberate policy choice to bridge the regional mechanization gap.

Digital integration: the CHC Farm Machinery app 🔗

A policy is only as effective as a farmer’s ability to access it. Recognising that awareness and connectivity are persistent challenges, the Ministry of Agriculture developed a multilingual mobile app called ‘CHC-Farm Machinery’ that connects farmers directly with Custom Hiring Service Centres in their locality. The app allows farmers to locate nearby CHCs, check equipment availability, and book machinery – reducing the friction between policy intent and ground-level delivery. State governments have also built complementary platforms; Tamil Nadu’s Uzhavan app, for instance, connects farmers to subsidized tractor and equipment services offered by local CHCs.

Implementation and impact: state-wise reach 🔗

SMAM’s financial outflow across states gives a sense of its scale. Between 2014-15 and 2020-21, Andhra Pradesh received Rs. 621.23 crore for establishing over 525 CHCs and 34 Hi-Tech Hubs, while Tamil Nadu received Rs. 421.65 crore supporting 115 CHCs, 10 Hi-Tech Hubs, and 100 village-level machinery banks. Even states with smaller allocations, like Manipur and Nagaland, have used SMAM funds to establish farm machinery banks that provide village-level access to equipment.

The scheme has also nudged farm power availability upward. Average farm power in India increased from 0.48 kW per hectare in 1975-76 to 2.02 kW per hectare by 2016-17, with SMAM contributing significantly to this rise since 2014-15. The target is to reach 4 kW per hectare by 2030.

Challenges that remain 🔗

Despite measurable progress, structural challenges persist. A parliamentary committee noted that while CHCs and machinery banks have been established across almost all states, their benefits have not adequately percolated to the district, taluka, panchayat, and gram sabha levels. Awareness gaps remain: many farmers – especially in remote areas – are unaware of subsidy entitlements or how to apply for them.

There is also the challenge of appropriate machinery design. India’s average farm size is under 2 hectares, far smaller than farms in the EU (14 hectares) or the US (170 hectares), making large machinery operationally unsuitable for most holdings. The parliamentary committee has recommended prioritizing the development of low-cost, scale-appropriate machines – mini-tillers, small reapers, lightweight sprayers – that can work efficiently on small, fragmented, and terraced plots. Research also supports investing more in developing small-scale implements suited to fragmented landholding settings, such as mini-tillers in the 5-9 horsepower range.

Subsidy disbursement delays and limited internet access in remote regions also continue to slow adoption. These are not insurmountable problems, but they do require continued administrative attention and investment in rural digital infrastructure.

SMAM’s role in a broader policy ecosystem 🔗

SMAM does not operate in isolation. It works alongside other flagship schemes – RKVY (Rashtriya Krishi Vikas Yojana), NFSM (National Food Security Mission), and the National Mission for Oilseeds and Oil Palm – that also support mechanization in sector-specific contexts. In September 2022, SMAM was merged with RKVY to streamline implementation, though the parliamentary committee has since recommended that this merger should not dilute SMAM’s core mandate of reaching small and marginal farmers. More recently, the government’s Digital Agriculture Mission (approved in September 2024) is expected to complement SMAM by building a digital agriculture ecosystem including decision-support systems, soil maps, and digital public infrastructure – setting the stage for a more data-driven approach to mechanization.

What do you think? Given that over 86% of India’s farmers hold less than 2 hectares of land, do you think Custom Hiring Centres are a sustainable long-term solution, or should policy focus more on developing affordable small-scale machinery for direct ownership? And with SMAM now merged into RKVY, how can policymakers ensure the scheme’s original focus on small and marginal farmers is not lost in broader agricultural development priorities?

References

1. https://prsindia.org/policy/report-summaries/farm-mechanisation-for-small-and-marginal-farmers
2. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1726205
3. https://www.india-briefing.com/news/india-farm-mechanization-sector-opportunities-challenges-31243.html/
4. https://pib.gov.in/newsite/printrelease.aspx?relid=167092
5. https://krishicenter.com/2025/12/05/smam-sub-mission-on-agricultural-mechanization/
6. https://tractorkarvan.com/blog/sub-mission-on-agriculture-mechanisation
7. https://www.drishtiias.com/state-pcs-current-affairs/custom-hiring-scheme-of-smam
8. https://diragri.assam.gov.in/schemes/sub-mission-on-agricultural-mechanisation-smam
9. https://agriculture.uk.gov.in/scheme/sub-mission-on-agriculture-mechanization-smam/
10. https://www.agrictools.com/blog/problems-of-farm-mechanization-in-india/
11. https://www.frontiersin.org/journals/sustainable-food-systems/articles/10.3389/fsufs.2023.922038/full