While most agtech firms are busy solving farmers’ problems with the latest high-tech device like robots or precision sprayers, there are notably fewer trying to satisfy the many millions without basic machinery like tractors.
India’s Tractor Junction is one of those few. India has more farmers than any other country yet for any of them wishing to buy a tractor, it can be an onerous task with the equipment expensive and the market messy and opaque.
But since launching in 2018, Tractor Junction has sought to bring transparency to the purchasing of rural machinery and has consequently grown into India’s largest rural auto-fintech platform.
In 2022, it raised $5.7m from investors including Omnivore and Info Edge Ventures to help it launch several brick-and-mortar stores, and this month returned for a Series A round of $22.6m led by Astanor, a Europe-based impact fund making its first investment in India.
The capital will be used to enhance Tractor Junction’s digital capabilities, deepen on-ground presence, and further strengthen its fintech capabilities. The company says this will enable it “to empower millions of underserved farmers with access to reliable vehicles and affordable credit”.
ATN sat down with two of its co-founders, Rajat Gupta and Animesh Agarwal, to hear about its plans.
ATN: Where did the idea for Tractor Junction come from?
RG: India is the world’s largest market for tractors. Almost one third of the world’s tractors are sold here – about 3 million each year and 1 million of those are new.
So the idea was pretty simple: let’s bring price and information transparency into the ecosystem because there is no fixed price or the right information for many tractors.
ATN: How do you do that?
RG: We have three businesses. One business is a platform where we connect farmers with dealers. In that model, we make money through the leads from the dealers. More than 6 million farmers visit our platform on a monthly basis making us India’s largest agritech platform.
The second bit is used tractor distribution. We operate 65 dealerships across five states in India, selling approximately 300 to 350 used tractors each month. When we are doing this, 70% of the sales are happening on financing so we also had to partner with lenders to get funds for these customers.
The problem is that in rural India, no customer is getting easy financing. If they want any money, the local lenders are giving them money at interest rate up to 48%.
So the third business is a product called Used Tractor Financing where we give finance at around 20%. This business we started back in January 2024 and last month we originated about $17m of loans.
ATN: Why did you open the physical stores?
AA: Even in urban communities, to buy such a high-ticket item without physical inspection is not happening. So to expect the rural community to build that level of trust is not possible, at least in the foreseeable future.
ATN: You said one of the main issues in the market is transparency. How are you fixing that?
RG: Salesman will often earn more on sales of a certain tractor so they push that sale. They want to sell a 50-horsepower tractor even though they know a farmer only needs 40-horsepower. Our platform brings the right information to farmers so they can choose the right tractors at the right price.
AA: The way the Indian tractor market is structured, every dealer is given a captive geography to operate in. So if you are a John Deere dealer in one area, no other dealer can sell a John Deere tractor in that area. That makes every market monopolistic and leads to pricing monopolies. We are breaking that.
ATN: Are there any plans to expand beyond India?
RG: Not at the moment. India is a big enough market, and we are not limited to tractors. We are already in rural autotech, and commercial vehicles because 70% of the sales of the commercial vehicles are happening in a rural India.
We are also operating a platform called Bike Junction [for motorbikes] and Infra Junction [for construction equipment], because again, 70% of those sales are happening in rural India.
ATN: What do you think is the big attraction to your investors at the moment?
RG: The size of this category is approximately $50bn so it’s a big opportunity for expansion.
In most of India, and most of world, most agritech companies are doing something in the input side or the output side. We are the one unique company which is across fintech and the autotech category. We’re also growing at lighting speed.
ATN: How fast?
RG: Our revenue nearly doubled last year from ₹63.4 crore (£5.5m) to ₹120.8 crore (£10.4m). [Losses also surged in the period from ₹3.7 crore to ₹9.1 crore.]
ATN: What’s the main driver of that growth?
RG: Used vehicle financing. It almost doubled last year.
