ICRA Report: Indian Tractor Industry Sees Strong Growth in August 2025

Key Highlights:

• Wholesale volumes up 28.2% YoY in August 2025.

• Retail volumes up 30.1% YoY.

• Cumulative growth of 11.7% in the first five months of FY2026.

• GST reduction to 5% expected to boost festive demand.

• Strong crop production and healthy sown area support sales.

The Indian tractor industry has posted robust growth in August 2025, driven by favorable monsoon conditions and positive farmer sentiment, according to a report by ICRA.

Wholesale and Retail Growth

ICRA data shows that wholesale tractor volumes increased by 28.2% year-on-year in August 2025. Retail sales performed even better, rising by 30.1% compared to the same period last year. This strong growth reflects healthy demand from farmers across the country.

Impact of Monsoon and Agricultural Activities

The growth comes amid above-normal rainfall, with India receiving 108% of the long-period average until September 17, 2025. The early onset of the monsoon has supported agricultural activities and encouraged farmers to invest in new tractors.

Cumulative Growth and Future Outlook

For the first five months of FY2026, the industry has achieved a cumulative growth of 11.7% year-on-year. ICRA projects moderate growth of 4-7% for the full fiscal year, supported by favorable weather and agricultural conditions.

Policy Support Boosts Demand

The recent reduction in GST rates on tractors to 5% is expected to boost demand further, especially during the upcoming festive season. Analysts also note that pre-buying may increase ahead of the proposed TREM V emission norms set to come into effect from April 1, 2026.

Positive Crop Production Indicators

Agricultural production continues to support tractor demand. The third Advance Estimates for kharif and rabi crops for AY2024-25 indicate year-on-year growth of 7.9% and 4.5% in foodgrain output, respectively, compared to AY2023-24. Additionally, the sown area for kharif crops exceeded normal levels by September 12, 2025, thanks to healthy rainfall.

Strong Industry Fundamentals

ICRA’s assessment highlights that tractor manufacturers maintain robust credit profiles. They are expected to benefit from volume growth, operational leverage, and stable raw material costs. Margins are likely to remain healthy, backed by rising sales and controlled input costs.

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CMV360 Says

Favorable monsoon patterns, supportive government policies, and strong agricultural fundamentals have created a positive environment for the Indian tractor industry. With rising demand and healthy margins, the sector is set to sustain growth through FY2026.