Rating agency ICRA has increased its growth projection for India’s tractor sector, citing robust demand, supportive policies, and favorable agricultural conditions. The agency now anticipates a 15–17% growth in tractor wholesale volumes for the financial year 2025–26, a significant rise from its previous forecast of 8–10%. This positive outlook follows a strong performance in recent months, with tractor wholesale volumes surging by 30.1% year-on-year in November 2025 and retail sales spiking by 56.5% during the same period.
The industry has already witnessed a cumulative growth of 19.2% in the first eight months of FY2026. ICRA attributes these impressive figures to a buoyant rural sentiment and enhanced affordability resulting from a reduction in the Goods and Services Tax (GST) on tractors. The reduction in GST to 5% has led to a price decrease of approximately Rs 40,000 to Rs 1 lakh, varying by horsepower segment, making tractor purchases more accessible for farmers and stimulating demand in rural markets.
Moreover, conducive agricultural conditions have also contributed to the uptick in tractor sales. The 2025 southwest monsoon, which saw above-normal rainfall at 108% of the long-period average, provided a solid foundation for farming activities despite uneven distribution. Notably, kharif foodgrain output rose by 2% year-on-year according to the first advance estimates released by the Ministry of Agriculture and Farmers’ Welfare in late November, with crop sowing increasing by 5% by mid-December, bolstering the agricultural economy and farm incomes.
Looking forward, ICRA foresees continued robust demand for tractors throughout FY2026. In addition to favorable monsoons and reduced prices, the agency believes that pre-purchases ahead of the proposed TREM V emission norms could further boost volumes. These stringent emission standards are slated to be enforced from April 1, 2026, prompting farmers and dealers to acquire tractors under the current regulations before the transition.
