Tractor Industry to Grow 4–7% in FY2026, Says ICRA

Key Highlights

• Tractor industry projected to grow 4–7% in FY2026.

• FY2025 saw a 1% decline, but recovery has begun.

• Above-normal rainfall to support kharif sowing and tractor demand.

• MSP hike of 1.4–12.5% to boost farm incomes by INR 35,000 crore.

• Mahindra & Mahindra leads market; 31–50 HP tractors dominate sales.

India’s tractor industry is set to continue its growth momentum in FY2026, with volumes projected to rise by 4–7%, according to the latest report by ICRA. This positive outlook is supported by good monsoon conditions, stronger farm sentiments, and steady rural demand.

Industry Recovery After FY2025 Decline

The tractor sector witnessed a mixed trend in FY2025, recording a 1% drop in overall sales. However, signs of recovery are already visible. In July 2025, wholesale tractor volumes grew 8% year-on-year, while retail volumes increased 11%. Earlier in May 2025, domestic tractor sales also rose 9.12% year-on-year, driven by early monsoons and healthy rural demand.

Key Growth Drivers

The growth forecast is strongly backed by the India Meteorological Department’s prediction of above-normal rainfall at 106% of the long-period average. This will support kharif sowing and farm activities, leading to higher tractor demand.

Government policies are also boosting rural sentiments. The Minimum Support Price (MSP) for 14 kharif crops has been raised by 1.4–12.5%, adding nearly INR 35,000 crore to farm incomes in 2025. Higher farm earnings, especially in key states like Punjab and Haryana, are expected to increase tractor purchases.

The Ministry of Agriculture and Farmers Welfare also reported a rise in agricultural output. Its third Advance Estimates for AY2024-25 show foodgrain production increased by 7.9% in kharif crops and 4.5% in rabi crops compared to last year.

Market Size and Competition

India’s tractor market is expected to touch USD 8.4 billion in 2025, with a medium-term CAGR of 6–7%. Mahindra & Mahindra continues to dominate the market, selling around 389,000 units in FY2023. Other major players include Sonalika, Swaraj, Escorts, and John Deere.

The 31–50 HP tractor segment leads the market with a 46% share, catering mainly to small and marginal farmers owning 1–3 hectares of land.

Additional demand may come from pre-buying ahead of the implementation of TREM V emission norms from April 1, 2026. At the same time, modern technologies like GPS systems and variable rate technology are gaining traction, helping farmers adopt precision farming practices.

Strong Financial Outlook for Tractor Makers

ICRA expects tractor manufacturers to maintain a strong financial position in FY2026. Rising sales, stable raw material prices, and better operating leverage are likely to sustain profit margins. With low debt levels, sufficient cash reserves, and healthy balance sheets, tractor OEMs are well-positioned for long-term growth.

Also Read: Mahindra Tractor Sales August 2025: 28% Growth in Domestic Sales, 37% Rise in Exports

CMV360 Says

India’s tractor industry is gearing up for healthy growth in FY2026 after a small decline in FY2025. Supported by strong monsoon rainfall, higher farm incomes, rising demand, and government support, tractor sales are expected to rise steadily. With increasing adoption of technology and financial strength among OEMs, the industry is set for long-term sustainable expansion.