ICRA has significantly upgraded its growth forecast for India’s tractor industry, projecting 15–17% wholesale volume growth in FY2026, up from its earlier estimate of 8–10%. The upward revision reflects a sharp improvement in demand fundamentals, strong recent sales momentum, and supportive policy and rural conditions.
The rating agency highlighted robust industry performance in recent months, with tractor wholesale volumes rising 30.1% year-on-year in November 2025. Cumulative volumes during the first eight months of FY2026 recorded a healthy 19.2% growth, a marked acceleration compared to the 7% growth registered in FY2025.
A key catalyst behind the improved outlook has been the reduction of GST on tractors to 5%, which has materially enhanced affordability for farmers. The tax cut has led to price reductions ranging from approximately ₹40,000 to ₹1 lakh, depending on horsepower categories, directly stimulating replacement and first-time purchases.
Favourable agricultural conditions have further strengthened demand sentiment. The Southwest Monsoon 2025 concluded at 108% of the long-period average, and despite some regional variability, adequate rainfall supported crop sowing and yield prospects. Improved farm incomes and healthier rural cash flows have translated into stronger tractor demand across key markets.
ICRA also expects pre-buying activity ahead of the implementation of TREM V emission norms, scheduled to come into effect from April 1, 2026. Anticipation of higher costs under the new emission standards is likely to prompt farmers and dealers to advance purchases under existing norms, offering a near-term boost to industry volumes.
From a financial standpoint, the credit profiles of leading tractor manufacturers remain stable and resilient. ICRA noted that anticipated volume growth, low leverage levels, and adequate cash and liquid investments continue to support the sector’s overall financial health.
