New Delhi [India], April 21 : India's domestic tractor sales are expected to reach an all-time high of around 9.75 lakh units in fiscal 2026, marking a 3-5 per cent increase over the previous year, according to a report by CRISIL Ratings.
The report highlighted that this growth will be driven primarily by an expected above-normal monsoon, higher minimum support prices (MSPs) for key cash crops, and a steady rise in replacement and construction demand.
It said, "Monsoon boost to drive tractor volumes to new high of ~9.75 lakh units. Expected increase in crop MSP, replacement demand to support sales Domestic sales volume of tractors is set to hit an all-time high of ~9.75 lakh units in fiscal 2026".
The projected figure would surpass the previous peak of 9.45 lakh units recorded in fiscal 2023, continuing the upward trend seen since fiscal 2019.
The report also noted that in fiscal 2025, the industry witnessed a healthy 7 per cent growth in tractor sales, which helped set the stage for another year of expansion.
Agriculture remains the major driver of tractor sales in India, contributing 70-75 per cent of the demand, while the remaining 25-30 per cent comes from construction and related activities.
The report added that pre-buying ahead of the implementation of the new TREM V emission norms from April 1, 2026, could further support sales volume towards the end of the fiscal.
The upcoming emission regulations are expected to increase tractor prices by 10-20 per cent, depending on the engine capacity. This could prompt farmers and buyers to advance their purchases before the price hike.
A similar trend was observed after the rollout of TREM IV norms, when sales of tractors above 50 horsepower (HP) dropped, and demand shifted towards 41-50 HP models, which currently hold a 64 per cent market share. This shift highlighted how sensitive buyers are to price increases.
CRISIL's analysis covered five major original equipment manufacturers (OEMs), which together account for more than 90 per cent of the industry's volume. These OEMs are well-positioned to benefit from the expected growth, thanks to strong cash flows, low debt levels, and robust liquidity.
This financial strength will also help them invest in increasing capacity and upgrading to the new emission control technologies.
The report stated that the operating margins for tractor manufacturers are likely to remain stable at 13.0-13.5 per cent in fiscal 2026, helped by rising volumes and easing input costs. This would be in line with the margins seen over the past two fiscals, further strengthening the sector's financial health.
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