Costing Kubota roughly US$143.5 million, the investment is not only designed to increase the brand’s presence in India (the world’s largest tractor market in terms of volumes), but also strengthen its position in other global markets.
The two companies established a joint venture at the end of 2018 to develop a new range of high-tech tractors for both domestic and international markets. Now that Kubota has acquired a stake in the Indian tractor manufacturer, the two companies intend to deepen their cooperative relationship and create synergy across a broad range of their business, including development, production, sales, distribution, and parts procurement.
Going forward, the aim of joint R&D is to create products optimised for the local market. The deal is likely to be completed by June 2020 and production of a new range of tractors is due to start this summer.
Kubota first secured a foothold in India in 2008, when it established Kubota Agricultural Machinery India (KAI). To further facilitate and strengthen the collaboration with its new partner, Kubota will sell 40% of its stake in KAI to Escorts.
Established in Faridabad City in the northern Indian state of Haryana in 1944, as well as tractors and farm machinery, Escorts also manufactures construction and railway-related equipment. Staff numbers totalled around 11,000 at the end of 2019.