Tractor Sales in India Expected to Grow 4–7% in FY26, Says ICRA

Key Highlights:

• Tractor sales may grow 4–7% in FY26.

• Good monsoon forecast to boost farm output.

• Kharif output up 7.9%, rabi sowing up 1.5%.

• Early rains pushed May tractor sales up 9.1%.

• Pre-buying expected before TREM V norms in 2026.

In a positive outlook for the agriculture sector, ICRA has forecasted a 4–7% growth in tractor sales across India during the financial year 2025–26. The growth will be driven by a favourable monsoon, strong crop output, and an expected rise in pre-buying activity before the implementation of new emission norms.

Monsoon and Agriculture Boost Tractor Demand

ICRA, a well-known credit rating agency, reported that the tractor industry saw a 7% increase in wholesale volumes in FY2025, thanks to steady rural demand and sufficient rainfall in key farming areas. This positive trend is likely to continue in FY2026, supported by good rainfall and improved agricultural output.

According to the Indian Meteorological Department (IMD), the monsoon this year is expected to be 105% of the long-period average (LPA), which will directly benefit crop production and strengthen farm sentiment. This increase in farming activity is likely to increase the demand for tractors across the country.

Crop Output Showing Positive Trends

The third advance estimates released in May 2025 show a 7.9% year-on-year (YoY) growth in kharif crop output. This indicates higher foodgrain production and better income for farmers. Similarly, rabi sowing saw a 1.5% YoY increase, signaling improved rural activity and continuous investment in farm machinery like tractors.

Early Monsoon Supports May Tractor Sales

ICRA also pointed out that early rainfall and the timely start of kharif sowing have boosted tractor sales in May 2025. Wholesale tractor volumes increased by 9.1% YoY, while retail sales rose by 2.8% YoY during the same period.

The early arrival of the monsoon has played a major role in driving farmer purchases and maintaining strong demand in rural markets. As farmers prepare for the kharif season, the market is seeing a rise in tractor bookings and deliveries.

Pre-Buying Before Emission Norms to Aid Growth

Another key factor supporting FY26 tractor sales is the expected pre-buying activity before the new emission regulations, TREM V norms, come into effect on April 1, 2026. Farmers and fleet operators are likely to advance their purchases to avoid higher costs associated with newer emission-compliant models.

This pre-buying could significantly boost volumes during the year, especially in the second half of FY26.

Rising Steel Costs May Pressure Manufacturers

Despite the overall positive outlook, ICRA warned about potential cost pressures due to rising steel prices. A 12% import tariff on select steel items, implemented from April 2025, may lead to higher input costs for tractor manufacturers.

With domestic steel demand also on the rise, tractor makers might face increased production costs in FY26. However, ICRA believes the credit profiles of most tractor manufacturers will remain stable due to their low debt levels, healthy cash reserves, and consistent sales growth.

Also Read: Isobutanol Could Replace Diesel in Tractors, Says Nitin Gadkari

CMV360 Says

India’s tractor industry is assured for moderate growth in FY26, backed by good monsoon conditions, strong farm output, and increased rural activity. While rising steel costs may pose challenges, strong demand and strategic pre-buying ahead of emission norms are expected to drive healthy sales, keeping the sector on a stable growth path.