Move over Rs 1 lakh car, here's a tractor similarly priced with Tata's to-be-launched small car. For years, banks and financial institutions have shied away from giving loans to small farmers on the pretext that a tractor loan of Rs 3.5 lakh could be a high risk.

But, just when the lack of options was threatening to push farmers away from mechanisation, a rebel movement led by small town innovators and rural manufacturers could challenge major tractor players.

With tractors below 25 horsepower (HP) constituting 10-15 per cent of the total sales of 2,60,000 units, it was just 5 per cent two years back, experts feel there is huge scope in the small tractors segment.

Bhanjibhai Mathukiya, a small innovator from Junagadh, has created a mini tractor of 10 HP, after being moved by the plight of the small groundnut and orchard farmers in Saurashtra.

The innovation has been shortlisted for the Indian School of Business, Hyderabad's 'Metamorphosis' event, where top business school students will create business plans for Indian innovators.

Mahesh Patel, chief innovator at the Grassroots Innovation Augmentation Network, which has been incubating the small tractor, says that non-exclusive rights of the invention have already been taken up by an Anand-based company, with many others showing interest.

"Working with the students of the S P Jain Institute of Management & Research, Mumbai, we have priced the product at just above Rs 1.6 lakh, which is sure to be a hit with farmers who are otherwise helpless in a market flooded with high power tractors suitable for use in a large land holding only," said Patel.

Similar to Mathukiya, another rural inventor had earlier come up with the unique concept of 'Bullet Saathi', a multi-purpose toolbar installed on an Enfield Bullet motorcycle, which was designed for those farmers who found it difficult even to afford a low-end tractor. The vehicle went on to become a rage in the Amreli district in Gujarat, where close to 700 units of the vehicle have been sold.  

Anil K Gupta, a senior faculty member at the Indian Institute of Management, Ahmedabad, and founder of the National Innovation Foundation, India, said that although bigger tractor companies are doing good business through high-powered vehicles, funding for 10-12 HP tractors would soon flow in, considering that there is such a large pool of small farmers. These inventors have been early to spot the winds of change in the tractor market.

Local companies have begun to price their low-powered tractors aggressively, since they import components and engines from China and Taiwan.

This has also led bigger tractor companies to rethink their plans for lower-end markets.  International Tractors, maker of the Sonalika brand of tractors, has just launched its entry-level tractor of 30 HP targeted at small farmers working on chikku, groundnuts, orchards and waste weed among others.

"The product, priced under Rs 3 lakh, has been launched to take advantage of the below-30 HP market, which is set to grow to 20-25 per cent within the next two years," said PK Daukia, deputy GM-Gujarat, International Tractors.

Major tractor companies have also woken up to the fact that in the smaller farming pockets, a tractor doubles up as a transport vehicle.

Ravindra Kumar, MD of SAS tractors, which manufactures the Angad brand of entry level tractors, says that due to the multi-utility factor, there is more room for mechanisation in India compared with China where the market for sub-25 HP tractors is in excess of 2 million units per year.