CNH CEO says can weather US tariffs for months, eyes second India plant

New Delhi, Sep 9 (PTI) Agricultural equipment giant CNH can sustain operations without shipping from India to the United States for more than six months due to existing stock levels, its Chief Executive Officer Gerrit Marx said on Tuesday.

The Italian-American off-road construction and agricultural firm, which exports about 30 per cent of its Indian production to the US market, is navigating 50 per cent tariffs imposed on Indian agricultural machinery imports.

"We have enough stock of locally India-made machines in the US," Marx, who is on his second visit to India, told reporters.

"Given that the market goes slow and we have a decent level of stock of these machines already in the United States, we just stop shipping at this point." Marx termed the current 50 per cent tariffs as "a kind of pause in an ongoing conversation" rather than a final negotiated outcome, expressing optimism that a deal between India and the US could emerge by early next year.

"The tariffs right now, the 50 per cent that are imposed on India right now, is not a result of negotiations. It's a kind of a pause on a discussion where both sides, I think, currently are reassessing their options," he said.

"At this point, we are shipping from India into the US only what we have to because any other shipment wouldn't make any economic sense," Marx said, adding that CNH has adequate stock of Indian-made utilities and compacts from Korean partners.

Acknowledging that CNH is impacted similarly to other agricultural equipment makers by the tariffs, Marx said the company is exploring supply chain and production adjustments but remains cautious about major relocations.

"I am very hesitant right now to move production from one place to another because of tariffs that we even didn't know eight months ago. And maybe they look different again eight months from now," he said.

Marx clarified that CNH's planned second India plant is not driven by tariff concerns but by long-term growth strategy.

"We are not setting up a second plant in India for exports to the United States. We are doing it because it's the right thing to do, to go double down on utility light tractors," he said.

The company is prepared to absorb losses temporarily if needed to maintain customer relationships. "We are here for the long term," he said.

Despite tariff challenges, CNH is doubling down on India with plans for a potential fourth manufacturing site. The company's current Noida facility is approaching maximum capacity.

The company, Marx said, is aiming at double-digit market share in India's tractor segment within five years from the current 5 per cent.

CNH produces approximately 37,000 tractors annually for the Indian market and exports 14,000 units, with 70 per cent going to Europe, Middle East and Africa, and 30 per cent to the US.

DIGITAL INNOVATION CNH plans to develop India-specific digital farming solutions, including cost-efficient fleet management systems and basic auto-guidance technology tailored to local farming operations.

"There is a very, very strong push here locally to have a very cost-efficient digital technologies, fleet management systems, auto guidance systems, farm management systems, stuff that is suitable to the Indian farmer," Marx said.

"We cannot bring what we have developed in the United States... to India, because these are off-board IoT tools that are made for very, very large farm operations," Marx explained, noting that Indian farmers operate differently from those in the US and Europe.

The company is investing in local engineering capabilities to develop products specifically for the Indian market and similar export destinations, emphasizing the need to "innovate locally, to sell locally".

STRATEGIC SHIFT Marx acknowledged that CNH had previously underutilised India's potential, treating it primarily as a support centre rather than a strategic hub.

"India was in the past not given the level of priority as a market to sell, as a place to engineer... to source from, and to export from," Marx told reporters.

He said CNH used its Indian engineering teams as "a bit of a workbench of some global product lines" but is now localising engineering for entire product lines.

"We are going to localise engineering for the one or the other entire product lineup over time here in India," Marx said, adding that the company is giving "leadership and authority over several product lines to our teams in India to engineer them for India, but also for the export markets." The company is also revamping its India Technology Center in Gurugram, which Marx said was originally created for outsourced services but is now being developed for cost-efficient innovation suited to local market needs.

"Low-cost doesn't mean low function, so low cost means cost-efficient innovation that a farmer that operates a 50-horsepower tractor or a 60-horsepower tractor can use," he explained.

To achieve double-digit market share, CNH India President and Managing Director Narinder Mittal said CNH is expanding beyond its traditional strength in higher horsepower segments above 50 HP, where it held nearly 20 per cent market share in Punjab.

"In the last couple of years, we have also started focusing on the lower HP segment, coming up with some smart series of tractors, 35-40 HP." The company has developed compact tractors in the 35-49 HP range primarily for export markets, while tailoring smaller compact models specifically for Indian farmers' needs. PTI LUX TRB