ICRA projects a 4–7% growth in tractor sales for FY26, driven by a favourable monsoon forecast, positive farm sentiments, and pre-buying ahead of new emission norms. Let’s take a closer look at what’s driving this projection.
India's tractor industry is expected to witness moderate growth of 4–7% in FY2025–26, according to a recent outlook by ratings agency ICRA. The growth is expected to be fuelled by a combination of supportive factors, particularly a favourable monsoon, increased agricultural output, and anticipatory purchases ahead of the TREM V emission regulations slated for April 2026.
In FY25, the sector had already registered a 7% increase in wholesale volumes, aided by steady rural demand and adequate rainfall. The positive momentum appears set to continue into FY26.
The India Meteorological Department (IMD) has forecast an above-normal monsoon with 105% of the Long Period Average (LPA), raising hopes of robust kharif and rabi crop yields. ICRA notes that this bodes well for the rural economy, as stronger crop output often correlates with higher tractor demand.
According to the third advance estimates released in May 2025, kharif crop output is expected to rise by 7.9% year-on-year, while rabi sowing has seen a 1.5% increase — both indicators of potential improvement in farm income.
Another driver for FY26 growth could be pre-buying activity in the latter half of the fiscal year, ahead of the implementation of the TREM V emission norms in April 2026. This regulatory change could encourage buyers to make early purchases to avoid increased costs or model shifts.
In May 2025, tractor wholesale volumes rose by 9.1% year-on-year, while retail sales posted a 2.8% increase. The early onset of the monsoon and timely kharif sowing have strengthened farm sentiment, contributing to sustained demand.
Despite the optimism, ICRA has flagged rising input costs as a concern. The imposition of a 12% tariff on certain steel imports starting April 2025 and rising domestic steel demand may push up commodity costs, potentially affecting profitability across the value chain.
With tractor sales projected to grow 4–7% in FY26, investors may keep an eye on key listed players in the sector. Among the most actively traded and relevant tractor-related stocks on Indian exchanges are:
Read More: Top Monsoon Stocks to Watch in 2025 Amid Imd’s Early Rainfall Prediction.
With strong rural sentiment, healthy crop output projections, and policy-driven buying patterns, India's tractor market is poised for moderate growth in FY26. However, manufacturers and dealers must stay mindful of input cost pressures and regulatory shifts as they navigate the year ahead.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jun 19, 2025, 12:43 PM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
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