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Informist, Saturday, Dec. 27, 2025

 

MUMBAI – Rating agency ICRA Ltd. upwardly revised its wholesale volume growth expectations for the tractor industry to 15–17% for 2025-26 (Apr-Mar) from its earlier estimate of an 8-10% on-year growth. This growth would be significantly higher than the 7% on-year increase recorded in the previous financial year, ICRA said in a report. The agency revised its growth estimates on the back of higher demand caused by supportive economic and regulatory changes, primarily the lowering of the goods and services tax.

 

The tractor industry saw an over 30% on-year growth in wholesale volumes for November and a cumulative on-year rise of 19.2% for the first eight months of FY26. This growth has been led by a reduction of GST on tractors to 5%, which has increased affordability for farmers, with savings on tractors ranging from approximately INR 40,000 to INR 100,000 across different horsepower segments, according to the report. The credit profiles of major tractor manufacturers remain robust, underpinned by the expected growth in volume, historically low debt levels across the industry, and the maintenance of adequate cash and liquid investments by these companies, ICRA said.

Additionally, agricultural conditions further supported tractor demand. The 2025 southwest monsoon season ended with rainfall at 108% of the long-period average, according to the report. This level of rainfall was generally favourable for the farm economy, supporting crop sowing and yield expectations, contributing to healthier farm cash flows and positive rural sentiments, largely offsetting the impact of an uneven distribution.

 

ICRA also said the upcoming transition to the stricter emission norms under TREM V, or Tractor Emission Norms Stage V, is expected to influence sales in the coming quarters, and it expects a phase of pre-buying activity as customers and dealers are likely to purchase tractors under the current, familiar emission standards. The regulatory change is likely to provide a temporary boost to sales volumes ahead of its implementation on Apr. 1, 2026.   End

 

Reported by Eshitva Prakash

Edited by Tanima Banerjee

 

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