India's domestic sales of tractors are likely to reach an all-time high of 9.75 lakh units in fiscal 2026 with a year-on-year growth of 3-5%, reports a study brought out by rating agency Crisil Ratings on Monday.
A combination of the factors such as optimism over the monsoon going beyond normal levels, higher minimum support prices (MSPs) for cash crops, and stronger replacement and construction demand is expected to trigger the sales momentum.
With fresh TREM V emission standards to be implemented from April 1, 2026, Crisil also expects a surge in pre-buying activity towards the close of the fiscal year, further propelling sales volumes.
This momentum is likely to propel FY26 sales beyond the earlier peak of 9.45 lakh units achieved in FY23, sustaining the growth pattern witnessed since FY19. In FY25, tractor sales increased a robust 7%, the report added.
The above-normal monsoon forecast by the Indian Meteorological Department is likely to improve rural sentiment and bolster farmer confidence — an important factor driving farm investments such as tractors.
This, coupled with the anticipated increase in MSP for major cash crops, and an improvement in construction activity, particularly in road development supported by significant allocations in the Union Budget, should support 3–5% volume growth this fiscal," said Anuj Sethi, Senior Director, Crisil Ratings.
He also observed that price increases expected from the coming into force of TREM V norms would induce pre-buying in Q4 of FY26, providing a further boost to demand.
The report also points out that moderation in input costs and growth in volumes are expected to support tractor makers in sustaining operating margins between 13.0–13.5% — in line with the levels of the last two fiscal years.
Tractor manufacturers continue to be in a comfortable financial situation, aided by good cash flows, zero debt, and strong liquidity, with room to continue investing in capacity additions and emission control enhancements.
A positive outlook underlies this optimism based on a Crisil Ratings analysis of five top-of-the-line tractor OEMs, whose combined market share of more than 90% supports the optimism. Of the overall volumes, agriculture takes up approximately 70–75%, with construction and allied activity driving the balance of demand.
Tractor makers have begun FY26 on a firm basis, with margins remaining steady at 13-13.5% due to declining input costs and continued volume growth," commented Poonam Upadhyay, Director, Crisil Ratings.
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