NEW DELHI: Tractor sales surged sharply in the financial year 2026, with major OEMs posting double-digit volume growth. This growth momentum, however, may hit a roadblock as analysts forecast FY27 growth slowing to 0-3% amid high base effects and emerging El Niño risks.
Ratings agency Crisil stated that tractor sales growth is projected to slow sharply to 0-2% year-on-year to about 1.2 million units in FY27. This follows an estimated 22% on-year rise in FY26, primarily driven by rationalisation of the goods and services tax (GST) rates, while a favourable monsoon further supported farm incomes and demand.
Anuj Sethi, Senior Director, Crisil Ratings said that a healthy reservoir levels supporting upcoming crop cycle and stable tractor prices could lend some support in the first half of fiscal 2027. However, a potential El Niño may weigh on demand momentum in the second half, he added.
El Niño is a climate pattern characterised by abnormally warm ocean surface waters in the central-east Pacific, which weakens global trade winds and frequently triggers below-normal "lower" monsoon rainfall in India.
Ratings and research firm ICRA stated that the tractor industry wholesale volumes grew by 22.8% in 11M FY2026, supported by favourable monsoons, improved agricultural output and GST reduction on tractors. “Industry volumes are expected to reach an all-time high in FY2026. However, growth is likely to moderate to 1-4% in FY2027, given the high base and expected normalisation in demand,” it added.
Leading player Mahindra & Mahindra registered its highest-ever annual domestic sales of 505,930 units in FY26 as against 407,094 units sold in the previous financial year, registering a growth of 24%.
Tractors and Farm Equipment Limited (TAFE) announced a record performance in FY26, with tractor sales of approximately 214,951 units, the highest ever in the company’s history.
Sonalika Tractors also announced registering an all-time high of 180,504 sales in FY26 while Escorts Kubota's full-year FY26 domestic tractor volume came at 1,26,994 units, up 15% year-on-year. Escorts Kubota warned that the evolving geopolitical situation poses intermittent supply-side risks, including the potential non-availability of key fertilisers, which could impact Kharif crop preparedness.
Crisil stated that another development that could support tractor demand is the draft proposal by the Ministry of Road Transport and Highways to slowly phase in TREM-V emission norms segment-wise instead of the earlier proposal to introduce them for all segments from April 1, 2026. If the draft proposal is implemented, tractors below 25 horsepower (hp) and above 75 hp need to transition to new standards from October 1, 2026, while the 25-75 hp segment is left untouched until fiscal 2032.
Poonam Upadhyay, Director, Crisil Ratings said that 25-75 hp segment, which accounts for 90% of the volume, is highly sensitive to price changes. Had TREM-V norms been implemented from April 1, 2026, as earlier proposed, tractor prices could have risen by 15-20%. Such increases would have posed a challenge to sustaining demand momentum, added Upadhyay.