ICRA revises tractor industry growth forecast to 15-17% for FY26
ICRA attributes the improved outlook to a combination of supportive economic and regulatory factors that have strengthened demand fundamentals.
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KAMAL NARANG
Rating agency ICRA revised its wholesale volume growth outlook for the tractor industry upwards to 15-17 per cent for the financial year 2025-26 (FY26), a substantial increase from its earlier estimate of 8-10 per cent. The projected growth of 15-17 per cent for FY26 also represents a significant acceleration from the 7 per cent growth witnessed in the previous financial year (FY25).
This revision is based on the industry’s robust performance in recent months, including a notable 30 per cent year-on-year growth in wholesale volumes for November 2025 and a cumulative growth of 19 for the first eight months of FY26.
ICRA attributes the improved outlook to a combination of supportive economic and regulatory factors that have strengthened demand fundamentals. A primary driver has been the reduction of the Goods and Services Tax (GST) on tractors to 5 per cent, a policy change that has directly enhanced affordability for farmers. This reduction has translated into a decrease in tractor prices, with savings ranging from approximately ₹40,000 to ₹1,00,000 across different horsepower segments, making new tractors more accessible, said ICRA.
Positive sentiment
Agricultural conditions have further supported this demand. The 2025 Southwest Monsoon season concluded with rainfall at 108 per cent of the long-period average, providing a generally favourable base for the farm economy. While the distribution of rainfall was uneven, the overall adequate precipitation has supported crop sowing and yield expectations, contributing to healthier farm cash flows and positive rural sentiment.
An additional factor expected to influence sales in the coming quarters is the impending transition to stricter TREM V emission norms. With the new norms proposed to take effect from April 1, 2026, ICRA anticipates a phase of pre-buying activity as customers and dealers look to acquire tractors under the current, familiar emission standards. This regulatory change is likely to provide a temporary boost to sales volumes ahead of the implementation date.
ICRA also noted in its assessment that the credit profiles of major tractor manufacturers remain robust. This strength is underpinned by the anticipated volume growth, historically low debt levels across the industry, and the maintenance of adequate cash and liquid investments by these companies.
The revised forecast highlights a period of strong recovery and expansion for the tractor sector, driven by concrete policy support, favourable agricultural outcomes, and specific market dynamics related to regulatory changes, said ICRA.
Published on December 26, 2025
