Mumbai, April 29 Mahindra Tractors plans to launch an ultra-low-cost tractor to drive deep into the rural market.

The tractor that would cost around Rs 2 lakh and meet all the basic standards is in the concept stage.

Mahindra, the largest tractor maker in India, hopes to revive its domestic sales, which declined five per cent to 90,037 in the last fiscal, by attracting more farmers with a low cost model. The present cost of tractors is anywhere between Rs 3 lakh and Rs 6 lakh. The cheapest variant, which is likely to be launched in a year, targets small holding farmers who still use bullock carts to till the land.

“Our idea is to provide low-cost farming solutions to farmers. The proposed model will be small but will do the primary function of tilling land,” said Mr Ashok Sharma, Senior Vice-President, Farm Equipment Sector, Mahindra & Mahindra.

Mr Sharma declined to put a timeframe for the launch saying, “It will be premature to predict”. Although the domestic tractor market is now facing stagnation, the company sees good long term prospects in the country, where tractor ownership is just 19 for a 1,000 farmers.

The Government has set aside Rs 2,80,000 crore for agricultural credit in the current financial year and this will have a positive impact on farm equipment business, the company hopes. “There is a big opportunity in farm modernisation in the country,” said Mr Sharma.

Mahindra, the market leader in the tractor segment with 30 per cent share, hopes that its acquisition of Punjab Tractors would help the company scale up its market share to 40 per cent.

Its consolidation in the domestic tractor market, which is considered to be the largest in the world, helped Mahindra become one of the top three tractor makers in the world. The company exported 8,673 tractors last year.

With operations in the US, China and Africa, Mahindra Tractors sells around 1.2 lakh tractors worldwide.