India emerges as CNH's global export engine as the agricultural equipment maker pivots away from China.
27 Jul 2025 | 42814 Views | By Shahkar Abidi
In a strategic realignment within the global manufacturing landscape, agricultural and construction equipment giant CNH is increasingly positioning India, particularly its state-of-the-art facility in Pithampur, Madhya Pradesh, as a central hub for worldwide exports, a move that distinctly contrasts with its more domestically focused production approach in China.
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In a strategic realignment within the global manufacturing landscape, agricultural and construction equipment giant CNH is increasingly positioning India, particularly its state-of-the-art facility in Pithampur, Madhya Pradesh, as a central hub for worldwide exports, a move that distinctly contrasts with its more domestically focused production approach in China.
This shift is driven by a confluence of factors ranging from evolving emission standards and favorable labour costs to geopolitical trade dynamics and the specific demands of global markets.
CNH's manufacturing footprint is geographically diversified, but a clear distinction emerges when examining its operations in India versus China, especially in the context of serving markets beyond their respective borders.
While CNH does operate an agriculture plant in Harbin, China, producing equipment like balers and combine harvesters, the output from this facility is primarily intended for the China domestic market.
There was a period years ago where some Chinese tractor production was planned for export, but the decision was made to keep Chinese production only for the Chinese domestic market. CNH notably does not have a construction equipment plant in China.
In stark contrast, CNH's operations in India which first began way back in 1989 are deeply integrated into its global supply chain. For instance, its construction machinery, including vibratory compactors and backhoe loaders, is manufactured at the Pithampur plant in India, under its construction equipment brand, CASE Construction.
This facility serves as a significant global supplier base for the rest of CNH and the world. Similarly, agricultural machinery production from India through its plants in Greater Noida and Pune under its New Holland brand, encompasses tractors ranging from 45 to 90 horsepower, combine harvesters, and smaller sugar cane harvesters, is being exported big time to anywhere else in the world, including North America, Europe, Africa, the Middle East, and AsiaPacific.
India’s significance within the Asia-Pacific (APAC) construction equipment market is evident in the numbers. The country now accounts for roughly 10% of CNH’s total regional sales, with the domestic market contributing around 3,000 units annually to the company’s global total of 40,000. In addition, India exported approximately 5,000 machines in the past year.
Offering a bird's eye view of the dynamics Emre Karazli, Vice President Construction Segment, APAC said, "Several strategic considerations underpin this differential approach". He spoke on the sidelines of the roll out of CASE construction equipment's first BS (CEV) stage Vcompliant machine from its state-of-art manufacturing facility in Pithampur.
One key factor is the similarity of the products themselves. However, a more significant driver is the steps taken by the government of India towards emission convergence. India is rapidly moving towards adopting Stage 5 emission norms, which represent the highest level globally.
This aligns India with markets such as Europe, Israel, and South Korea, all of which are also at Stage 5, thereby facilitating exports to these regions. In the last few years, the transition to BS IV previously opened the North American market for Indian exports.
China's emission norms are currently at a lower level, China 4, which effectively confines products made there to China and other countries with similar standards. The alignment of India's emission standards with major global markets has played a major part in driving this growth of exports from India.
The transition to higher emission standards in India, particularly Stage 5, is not just about market access; it also offers tangible value to the customer, even in a market often perceived as price-sensitive.
The industry experts suggest that India's construction equipment market, while competitive, is not a price sensitive market. It is a value sensitive market. The move to BS5 engines, such as the FPT F28 used in upgraded backhoe loaders and compactors, leads to improved fuel efficiency, reducing diesel consumption by almost 2 to 3 litres per hour.
For a backhoe loader operating 2000 hours a year, this translates to a saving of 4000 to 6000 litres of diesel annually, which can substantially negate the initial increase in machine cost. Electronic engines also offer advantages like better power and torque optimization and enable telematics.
Labour costs also play a discernible role in this strategic calculus. According to analysts, the Chinese labor cost is approximately $7 per hour, compared to India's $1.50 per hour.
While China maintains strength in supply chain intricacy and repetitive manufacturing, CNH's construction products are described as highly customized and require a significant labour content, making India's lower labour costs advantageous.
"China's strength has been always supply chain intricacy, because a lot of manufacturing happens there" Satendra Tiwari, Executive Director - Operations, for CASE Construction Equipment, noted, while offering insights into the comparative nuances.
As the government initiatives in India, such as the PLI scheme, are actively bringing supply chains into the country, this is viewed viewed as a development that could eventually lead to China losing its competitive advantage in exporting widely.
The imposition of tariffs may further contribute to this reshaping of global trade routes, potentially giving a competitive advantage to India.
Trade tensions, particularly the arm wrestling between China and the US, involving potential tariffs, render exporting products from China to North America significantly challenging and strategically unviable for certain product lines. This situation is expected to reshape trade flows, and India is seen as potentially benefiting from this, partly due to its political stance towards the US.
Market Dynamics
According to Shalabh Chaturvedi, MD, CASE Construction Equipment - India & SAARC, the market- specific dynamics also influence production and export decisions.
The Indian market for backhoe loaders is notably large, with 50,000 units sold annually. In sharp contrast, China, despite being a much larger market overall, has a virtually non-existent backhoe industry, selling only 500-600 units.
This highlights how product suitability for a large domestic market like India can make it a natural production base, especially when that market's requirements are distinct from others.
For CNH, consolidating both agriculture and construction equipment, India is identified as one of the strongest global supplier bases. The rationale is clear: localizing production in India helps maintain quality, reduce cost, and makes products much more suitable for Asia-Pacific markets.
This is viewed as more effective than keeping production in North America or Europe, where competing with established manufacturers in Asia, especially from China, poses greater challenges.
The Pithampur facility is recognized for specific strengths, including flexibility. "This flexibility allows the plant to handle last-minute orders or changes, a capability described as the plant's biggest strength here. Beside the cost, beside the quality" Chaturvedi added. CNH employs a modularity concept in its product design.
A basic structure or platform is common for both domestic and export models, with country-specific features added like "Lego blocks". For export markets, extraordinary checks and 100% auditing (customer product audit) are applied in the factory, sometimes twice, to ensure zero complaints, as the cost of fixing issues in export markets is significantly higher than in India.
This approach relies on having the flexibility to produce variations based on market needs, including varying emission levels like India's Stage 5, North America's Tier 4, or lower levels for other Asian markets.
CASE India aims to become the number one CNH plant globally by volume. While margins vary by market, anything built in India contributes to the plant's profitability.