Tractor Industry Volumes Poised to Grow 4-7% in FY26, Says ICRA

New Delhi, September 1: The tractor sector is expected to keep its growth momentum in FY26, with more tractor volumes expected to grow 4-7%, said rating agency ICRA in a note. The growth outlook is partly premised upon the positive monsoon and stable demand trend.

Growth Outlook for FY26 Accelerates Amid 4-7% Expected Volume Rise Post FY25 7% Growth

After growing by 7% in FY25, tractor volumes are anticipated to grow further by approximately 4-7% in FY26. ICRA noted that the introduction of TREM V emission norms, effective April 1, 2026, may lead to pre-buying, which is likely to increase volumes in the upcoming months.

Strong Demand Trends Drive 8% Wholesale and 11% Retail Growth in July 2025

Tractor demand continued to show resilience in July 2025, with wholesale volumes increasing 8% as compared to July 2024, and retail sales up 11% compared to July 2024. These demand trends support our view of continued sector strength, with sustained supportive rural sentiment.

Above-Normal Monsoon at 106% LPA Likely to Stimulate Tractor Sales Through Higher Agri-Activity

The India Meteorological Department (IMD) has forecasted above-normal rainfall at 106% of the long-period average (LPA) for the current monsoon season. The forecast is likely to stimulate agricultural activity, which will, in turn, increase demand for tractors.

The third Advance Estimates published by the Ministry of Agriculture and Farmers Welfare for AY2024-25 in May 2025 offered additional optimism about increased farm output with foodgrain output growth of 7.9% for kharif crops and 4.5% for rabi crops on a YoY basis. The improvement in farm output will bolster rural incomes and tractor sales.

Industry Outlook Suggests Consistent FY26 Growth on Regulatory Pre-Buying and Positive Crop Yields

With positive crop outputs, promising rainfall forecast, and potential regulatory pre-buying likely before TREM V, the tractor industry is set for a consistent growth pattern in FY26. Increasing levels of agricultural production and full retail demand are expected to continue driving volumes higher.

Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations