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New DelhiTAFE plans to invest ₹1,250 crore in its fifth tractor plant, adding 60,000 units of annual capacity to strengthen domestic growth, exports and its presence in north India.
By Robin Kumar Attri
₹1,250 crore investment planned for the new plant.
New facility to produce 60,000 tractors annually.
Plant expected to be operational within 18 months.
TAFE sold around 2.14 lakh tractors last year.
New plant will strengthen exports and north India presence.
India's second-largest tractor manufacturer, TAFE, is planning a major expansion with the construction of its fifth tractor manufacturing facility in north India. The company is expected to invest up to ₹1,250 crore in the new plant, which will have an annual production capacity of around 60,000 tractors.
The expansion comes after a strong year for TAFE, during which the company sold around 2.14 lakh tractors and recorded significant growth in its domestic business and overall group revenue.
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TAFE is planning to establish its fifth tractor manufacturing plant in a north Indian state. However, the company has not yet finalised the exact location of the facility.
The upcoming plant is expected to have an annual production capacity of approximately 60,000 tractors and could be ready within 18 months. According to company executives, TAFE plans to invest up to ₹1,250 crore in the project.
The facility will be TAFE's first greenfield manufacturing plant in 29 years and will significantly increase the company's overall production capacity.
Mallika Srinivasan, Chairperson and Managing Director of TAFE, said the company is expanding its capacity in anticipation of strong demand from both domestic and international markets.
She said TAFE remains confident about the growth potential of its international business and will continue adding capacity as demand from India and export markets grows.
Currently, TAFE operates four tractor manufacturing plants with a combined annual production capacity of around 2.6 lakh tractors.
The addition of the new facility will increase the company's capacity by another 60,000 units annually and strengthen its manufacturing presence in north India.
The expansion is also expected to support TAFE's future export plans and help the company meet rising demand for tractors in different markets.
TAFE currently operates four major tractor manufacturing facilities across India.
Its flagship plant in Chennai was established in 1961. The company later set up another facility at Doddaballapur near Bengaluru in 1981.
TAFE added its Kalladipatti plant near Madurai in 1997. Its fourth tractor manufacturing facility is located in Bhopal and became part of the company after TAFE acquired Eicher's tractor business in 2005.
Together, these four facilities provide TAFE with an annual production capacity of approximately 2.6 lakh tractors. Rajasthan is also an important manufacturing location for the TAFE Group. Through its subsidiary, TAFE Motors, the company has partnered with German engine manufacturer DEUTZ AG to produce diesel and internal combustion engines at its Alwar facility. The Alwar plant has the capacity to manufacture up to 30,000 engines every year.
TAFE's decision to increase manufacturing capacity follows a strong financial year for the company. The company recorded 24.8% growth in its domestic business and sold around 2.14 lakh tractors during the year.
When TAFE's subsidiaries are included, including its plastics and engineering plastics businesses that supply products to the automobile industry, the group's total revenue reached close to ₹16,000 crore. This represented growth of nearly 25%.
Lakshmi Venu, Vice Chairperson of TAFE, said several factors supported the company's growth. Good monsoon rainfall improved farm demand, while the government's GST rate reduction also supported the tractor industry. Several state governments also introduced initiatives aimed at supporting farmers.
These favourable conditions encouraged many first-time buyers to purchase tractors. At the same time, existing tractor owners increasingly upgraded to higher-powered and premium tractor models.
Lakshmi Venu also spoke about her regular visits to TAFE dealers and customers. During these visits, she demonstrates her ability to drive a straight furrow using a 65 HP tractor. According to her, this reflects her belief that women can independently manage farms and operate tractors.
Her message highlights the increasing participation of women in farming and the growing importance of mechanisation in Indian agriculture.
TAFE has strengthened its position in the popular 41-50 HP tractor category. According to Crisil, TAFE held an 18% share of the overall Indian tractor market during the first nine months of FY26. Mahindra & Mahindra remained the market leader with a 44% share.
However, TAFE has made significant gains in the 41-50 HP segment, which is among the most popular tractor power categories in India. Crisil said TAFE's share in this segment was below 50% in FY20 but increased to 63% by the end of FY25.
The reduction in GST also supported demand in this category. The government reduced GST on tractors from 12% to 5% in September last year. Tractors in the 41-50 HP range are widely used for farming activities, haulage and construction-related work, making them a popular choice among Indian buyers.
TAFE expects its revenue to grow by around 10% during the current financial year.
Mallika Srinivasan said concerns regarding a major impact from El Niño have reduced. While June was the driest month, the situation did not become as serious as initially expected.
Rainfall conditions improved during July and August, supporting optimism in the agriculture sector.
However, TAFE expects some moderation in growth because the previous year delivered strong sales performance. Crisil has also projected slower growth for the overall tractor market. In its note dated March 18, the rating agency estimated that tractor sales growth could slow to between 0% and 2%, with total industry sales expected to reach around 1.2 million units.
The expected moderation has been linked to normalising domestic demand after a strong year and concerns surrounding the El Niño weather pattern.
Mahindra & Mahindra continues to be India's largest tractor manufacturer. The company sold 5,34,507 tractors last year and remains the dominant player in the domestic tractor market.
In February, Mahindra & Mahindra also announced plans to establish an automobile and tractor manufacturing facility in Nagpur. The company plans to invest ₹15,000 crore in the project over the next 10 years.
Despite intense competition, Mallika Srinivasan said India remains one of the world's largest tractor-producing countries. She noted that the Indian tractor market is highly competitive but also offers opportunities for companies to work together and create further growth. She also highlighted the long-standing relationships between promoter families within the tractor industry.
Apart from expanding its manufacturing operations, TAFE has also recently undergone a major ownership change.
The company purchased the 20% stake held by US-based agricultural machinery manufacturer AGCO for around $260 million, equivalent to approximately ₹2,300 crore.
AGCO owns several well-known agricultural equipment brands, including Massey Ferguson and Fendt. Following the transaction, TAFE became a wholly owned subsidiary of the Chennai-based Amalgamations Group.
Mallika Srinivasan said TAFE and AGCO shared a successful partnership for 65 years and described the transaction as beneficial for both companies. She also stated that TAFE remains AGCO's largest single shareholder.
As of Friday, the 16.3% stake held by Mallika Srinivasan and TAFE in AGCO was valued at approximately $1.3 billion. TAFE was founded by Mallika Srinivasan's grandfather, S. Anantharamakrishnan.
TAFE is a privately held company and does not file its financial statements with the Ministry of Corporate Affairs. As a result, the company's exact profitability is not publicly available.
However, TAFE is currently debt-free and has no plans to raise funds through an initial public offering.
The company instead appears focused on expanding its manufacturing capacity through the planned investment in its fifth tractor plant.
With an investment of up to ₹1,250 crore, TAFE's upcoming fifth manufacturing facility will add around 60,000 tractors to the company's annual production capacity.
The new plant is expected to strengthen TAFE's presence in north India while supporting rising domestic demand and the company's tractor export ambitions.
As TAFE prepares for future growth, the new facility marks an important step in its manufacturing expansion strategy and will be its first greenfield tractor plant in nearly three decades.
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TAFE’s planned ₹1,250 crore investment in its fifth tractor plant marks a major step in the company’s long-term growth strategy. The new facility will add 60,000 tractors to annual production capacity and strengthen TAFE’s presence in north India. Backed by strong sales, rising demand in the 41-50 HP segment and export opportunities, the expansion is expected to support TAFE’s domestic and international growth plans.
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