Custom Hiring as a Pathway to Mechanisation among Small and Marginal Farmers in India: Evidence, Institutional Constraints and Future Directions

Abstract

Small and marginal farmers face a structural mechanisation problem: many agricultural machines embody large fixed costs and require annual utilisation well beyond the demand of an individual small holding, yet delayed or labour-intensive operations can constrain yields, cropping intensity and farm income. Custom hiring converts machinery from a privately owned capital asset into a purchasable farm service and has therefore become central to India's strategy for inclusive mechanisation. This critical narrative review evaluates the evidence on custom hiring and Custom Hiring Centres (CHCs), with India as the principal setting and comparative evidence from other smallholder economies used to test the generality of proposed mechanisms. Literature published from 2000 to 20 July 2026 was searched across multidisciplinary, agricultural and economic scholarly sources, with earlier material retained only when historically necessary. The evidence indicates that service-based mechanisation can widen access to tractors, harvesters and specialised equipment, improve timeliness and reduce the need for under-utilised private investment. Indian studies also report favourable associations with production costs, profitability and perceived usefulness. Confidence in the size and distribution of these effects is nevertheless limited because much of the domestic literature is cross-sectional, geographically concentrated and vulnerable to selection bias. Stronger international studies confirm that machinery services can raise productivity and income, but also show that effects depend on service quality, distance, prices, provider incentives, farm size and the operation being mechanised. The central implementation challenge is therefore not simply establishing more centres, but building reliable service markets with viable fleet utilisation, transparent booking, skilled operators, maintenance capacity and equitable peak-season allocation. Digital platforms may improve routing and asset monitoring, although current evidence suggests that benefits can accrue more readily to service providers than to the smallest farmers unless analogue intermediation and local access are preserved. Future policy and research should shift from counting subsidised assets towards measuring utilisation, timeliness, farmer-level outcomes, provider viability, gendered effects and environmental performance. Custom hiring is best understood as an institutional mechanism that can relax, but does not automatically eliminate, the scale, transaction-cost and equity constraints of smallholder mechanisation.