South Korea’s largest agricultural machinery firm Tong Yang Moolsan Co. has struck a $5.5 million deal with Swaraj, a tractor making unit under India’s Mahindra Group, to license out its designing technology for tractors to be shipped to India and Africa.

The Korean company said Thursday it would develop the tractors and transfer the designs to Swaraj, which will manufacture the vehicles in India for sale at home and across Africa. The Indian company has set an annual sales target of 10,000 units of 20-horsepower (HP) compact tractors.

Swaraj sells more than 100,000 tractors annually in India and neighboring countries. Its parent company Mahindra Group also owns Korean automaker Ssangyong Motor Co. since 2011.

Tong Yang Moolsan said the alliance is a global recognition of its advanced design and manufacturing capabilities in tractors. It also projected solid growth for the 20-HP tractor market, which has seen a sharp rise in demand in recent years.

The Korean company expects to sell about 20,000 tractors globally this year, including 10,000 tractors and related machinery vehicles to its major client Mahindra USA, the Indian conglomerate’s American entity. It also plans to strengthen its partnership with American tractor makers Rural King and Zetor.

The latest deal is expected to help Tong Yang Moolsan further penetrate markets in Southeast Asia and Africa and bolster its global presence.

On Friday, shares of Tong Yang Moolsan gained 3.35 percent to close at 2,315 won ($2.07).

By Song Min-geun and Kim Hyo-jin

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