New Delhi, Dec 26 Rating agency ICRA on Friday raised its growth forecast for India’s tractor industry, citing strong demand, supportive policies and favourable farm conditions.
The agency now expects tractor wholesale volumes to grow by 15–17 per cent in the financial year 2025–26 (FY2026), sharply higher than its earlier estimate of 8–10 per cent.
This also marks a clear improvement from the 7 per cent growth recorded in FY2025, it said.
The upward revision comes after a strong performance in recent months. Tractor wholesale volumes rose by 30.1 per cent year-on-year (YoY) in November 2025, while retail sales jumped by 56.5 per cent during the same month.
For the first eight months of FY2026, the industry has already reported a cumulative growth of 19.2 per cent.
ICRA said the strong numbers reflect positive rural sentiment and better affordability following a cut in the Goods and Services Tax on tractors.
One of the key drivers behind the improved outlook is the reduction in GST on tractors to 5 per cent.
This tax cut has lowered tractor prices by around Rs 40,000 to Rs 1 lakh, depending on the horsepower segment, making purchases easier for farmers and boosting demand across rural markets.
Agricultural conditions have also played an important role in supporting tractor sales.
The 2025 southwest monsoon delivered above-normal rainfall at 108 per cent of the long-period average, providing a strong base for farming activity despite uneven distribution.
According to the first advance estimates released by the Ministry of Agriculture and Farmers’ Welfare in late November, kharif foodgrain output rose 2 per cent year-on-year.
Crop sowing was also higher, increasing by 5 per cent by mid-December, which helped strengthen the agri-economy and farm incomes.
Looking ahead, ICRA expects tractor demand to remain strong through FY2026. Apart from good monsoons and lower prices, the agency believes that pre-buying ahead of the proposed TREM V emission norms could further lift volumes.
These stricter emission standards are expected to come into effect from April 1, 2026, prompting farmers and dealers to purchase tractors under the current norms before the change.
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