New Delhi: Rating agency ICRA on Friday revised upward its growth outlook for India’s tractor industry, projecting a strong expansion driven by healthy rural demand, supportive policy measures and favourable agricultural conditions.
ICRA now expects tractor wholesale volumes to grow by 15–17 per cent in the financial year 2025–26 (FY26), significantly higher than its earlier forecast of 8–10 per cent. The revised estimate also reflects a sharp improvement over the 7 per cent growth recorded in FY25.
The upgrade follows a strong performance in recent months. Tractor wholesale volumes surged 30.1 per cent year-on-year in November 2025, while retail sales jumped 56.5 per cent during the same period. For the first eight months of FY26, the industry has already registered cumulative growth of 19.2 per cent.
According to ICRA, the strong momentum highlights positive rural sentiment and improved affordability, particularly after the reduction in the Goods and Services Tax on tractors.
A key factor supporting demand has been the cut in GST on tractors to 5 per cent, which has reduced prices by around Rs 40,000 to Rs 1 lakh, depending on the horsepower category. This price correction has made tractor purchases more accessible for farmers and boosted demand across rural markets.
Favourable agricultural conditions have also supported sales. The 2025 southwest monsoon recorded above-normal rainfall at 108 per cent of the long-period average, providing a solid base for farm activity despite uneven distribution. As per the first advance estimates released by the Ministry of Agriculture and Farmers’ Welfare in late November, kharif foodgrain output increased by 2 per cent year-on-year.
Crop sowing has also remained strong, rising by 5 per cent by mid-December, which has helped reinforce farm incomes and overall rural economic sentiment.
Looking ahead, ICRA expects tractor demand to remain firm throughout FY26. In addition to good monsoon conditions and lower prices, the agency noted that advance buying ahead of the proposed TREM V emission norms could further support volumes. These tighter emission standards are expected to take effect from April 1, 2026, encouraging farmers and dealers to purchase tractors under the existing norms before the transition.
With inputs from IANS