INDIA REPORT
The Indian tractor industry, which faced a stagnant first half of the fiscal year, is pinning its hopes on a robust second-half performance. With favorable developments like healthy reservoir levels, improved minimum support prices (MSPs), and a positive outlook on the Rabi crop, manufacturers are optimistic about achieving double-digit growth by the year-end.
H1 Performance: A Mixed Bag
In the first half of the fiscal year, tractor sales remained flat, growing marginally to 472,000 units from 469,000 units in the same period last year. The industry’s decline in FY2024 to 876,000 units, following a record-breaking FY23 at 945,000 units, underscores the impact of a high base effect, weak precipitation, and uneven monsoons. A shift in the festive calendar, with Diwali and Dhanteras occurring later this year, also affected demand in the early months.
H2 Optimism: Rabi Sowing Fuels Positive Sentiment
The completion of the Kharif harvest and the commencement of Rabi sowing are fueling optimism across the sector. Farmers’ cash flows remain strong, buoyed by good reservoir levels and higher MSPs for key Rabi crops. These factors, along with robust government spending on rural and agricultural development, are expected to boost tractor demand in the coming months.
“Farmer sentiments are positive, and healthy progress in Rabi sowing indicates that we’re poised for a strong second half,” notes Rajesh Jejurikar, Executive Director and CEO for Mahindra & Mahindra’s Auto and Farm Sector.
Festive Push and Retail Sales Trends
October brought signs of revival, with Mahindra & Mahindra and Escorts Kubota reporting significant growth. Mahindra saw a 30% jump in domestic sales, while Escorts Kubota achieved its highest-ever October sales, growing 22.6% year-on-year. However, the retail sales story was mixed. Overall tractor retail sales rose by 3% YoY in October, but rural sales saw a slight dip of 1.3%, countered by a 5.4% growth in urban areas.
Among top brands, John Deere led with a 29% YoY increase in retail sales, while TAFE Ltd and Escorts Kubota reported flat or declining figures, signaling uneven recovery across manufacturers.
Outlook: Growth Drivers and Challenges
The second half of the fiscal year is projected to deliver 10-15% volume growth, driven by:
- Healthy Rabi Crop Expectations: Good reservoir levels and increased government support through MSP hikes are expected to ensure higher cash inflows for farmers.
- Improved Rural Sentiments: Rising government expenditure on rural development and agricultural infrastructure is creating a positive ripple effect on demand.
- Pre-Buying Ahead of Emission Norms: The upcoming TREM-V emission norms in April 2026 are likely to drive significant pre-buying activity, boosting sales in late FY25 and early FY26.
Source: Auto Care Professional Read The Article
PSR Analysis: Despite these positive indicators, challenges persist, including fluctuations in rural demand and competitive pressures among key players.
Cautious Optimism for FY25 and Beyond
The tractor industry remains cautiously optimistic about closing the fiscal year with moderate growth, bolstered by favorable macroeconomic and policy trends. With the groundwork laid by Rabi sowing and strong rural sentiment, the sector is poised not only for recovery but also for setting new benchmarks in FY26 as regulatory changes loom on the horizon. PSR
Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research
