New Delhi: A favorable southwest monsoon, reduction in the Goods and Services Tax (GST) and the Chaitra Navratri festival, which is seen as an auspicious period for a decline in vehicle purchases in March this year, are expected to push domestic tractor sales to an all-time high of 1.17 million units in the current fiscal, said Hemal Thakkar, director, Crisil Intelligence.
With rural demand showing signs of recovery and political support remaining favourable, the tractor industry looks poised for one of its strongest performances in recent years, with festival-driven sentiment pushing shipments hard.
Domestic tractor sales have already seen a 21% jump in the first 10 months of the current fiscal year, with 978,137 units sold between April 2025 and January 2026, compared with 808,237 units sold in the same period last year, according to data from the Tractor and Mechanization Association (TMA). TMA represents manufacturers of tractors, agricultural machinery and agricultural mechanization.
Calendar year 2025 has witnessed strong growth in demand for tractors, reflecting strong rural fundamentals, improved farmer incomes and continued investment in mechanization, said Narinder Mittal, president and managing director of CNH India – makers of New Holland tractors.
Key things
- Domestic sales are expected to reach 1.15-1.17 million units in FY26, up 22-24% YoY.
- The reduction in GST from 12% to 5% has significantly reduced acquisition costs for first-time buyers and demand for replacement.
- Chaitra Navratri, in March 2026, coincides with the fiscal year-end and creates a unique surge in sales.
- The decreasing availability of cheap agricultural labor forces a structural shift towards mechanization for sowing and harvesting.
- Analysts predict a slowdown in FY27 as the market adjusts to the “high base” created by this year’s record performance.
With improved rainfall boosting kharif production and boosting rural cash flows, a normal and well-distributed monsoon usually boosts demand for mechanization, especially in the key agricultural states of Uttar Pradesh, Maharashtra, Madhya Pradesh, Chhattisgarh, Rajasthan and Karnataka.
Similarly, stronger Rabi sowing is expected to maintain the positive momentum of the sector. The GST rationalization has also reduced procurement costs for farmers by reducing the tax rate on tractors and farm machinery from 12% to 5%. In addition, easier financing and competitive schemes from NBFCs and banks are supporting first-time buyers and replacement demand. According to TMA data, domestic tractor sales stood at 939,725 units in FY25 compared to 867,085 vehicles in FY24.
Politics, seasonal catalysts
“The GST cut in September further boosted buying sentiment and this positive trend continued into early 2026. Calendar year 2025 saw domestic tractor sales at 10.9 lakh units, up 20% over 2024, and we can expect similar numbers for FY25-26,” said Narinder Mittal of CNH India.
Major tractor manufacturers in the country are Mahindra & Mahindra, Tractors and Farm Equipment Ltd (Tafe), International Tractors Ltd (manufacturers of Sonalika brand tractors), Escorts Kubota, John Deere and CNH (manufacturers of New Holland tractors).
Crisil Intelligence projects domestic tractor sales to grow 22-24% year-on-year to a record 1.15-1.17 million units in FY26, driven by a confluence of favorable factors.
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“An above-average monsoon season with 8% above normal rainfall strengthened agricultural conditions and supported demand for tractors. In the current year, demand for spares stemming from a strong sales cycle during fiscal 2017-2019 also materialized, providing further volume support,” said Hemal Thakkar, Director, Crisil Intelligence.
The recent reduction in GST rates on tractors from 12% to 5%, along with ongoing government financial programs in several key states, has further stimulated demand, Thakkar said. Strong reservoir level is likely to help Rabi crop production, expanded Kharif area and increased government purchases of crops further sustained the growth momentum.
India’s southwest monsoon, which lasts from June to September, has led to significant crop production. India’s Kharif foodgrain production is expected to rise to 173.33 million tonnes in 2025-26, according to first advance estimates released by the Union Agriculture Ministry on November 26.
Festive March
The Kharif production estimate is 3.87 million tonnes higher than last year. Rice production is expected at 124.50 million tonnes, up 1.73 million tonnes from the previous Kharif season. Agriculture and allied services are estimated to grow by 3.1% in FY26, according to the Economic Survey 2025-26.
Stronger Rabi sowing is also expected to maintain the positive momentum of the sector. India’s sowing of rabi or winter crops in 2025-26 increased by more than 1.82 million hectares to 66.04 million hectares as of January 23, according to data released by the Ministry of Agriculture and Farmers Welfare. Sown area is 2.8% higher than a year ago. The average coverage of the season is 63.78 million hectares.
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According to Professor Sudhir Panwar, a farm expert and former member of the Uttar Pradesh Planning Commission, farmers are investing in machinery to increase productivity and reduce dependence on labour, given the lack of cheap labour. “As workers migrate from villages to cities for jobs in construction, manufacturing and services, the availability of farm labor decreases. This forces farmers to adopt mechanization – especially tractors – to complete sowing, plowing and harvesting on time.”
States like Tamil Nadu, Karnataka, parts of Maharashtra, Gujarat, Punjab, Haryana, Madhya Pradesh and western Uttar Pradesh are witnessing mechanization-led growth in tractor sales amid rising rural wages and seasonal labor migration to urban centres, according to experts.
Tractor dealers said policy measures and a good kharif crop boosted rural sentiment.
“After the GST cut, we have seen a significant boom in sales. We now rely on the harvest of wheat and other pulses, which will bring liquidity into the hands of farmers and further strengthen their purchasing power,” said Manish Jain, partner at Arihant Motors, a Mahindra tractor dealer in Maharashtra.
Tractor industry experts also said that Chaitra Navratri (March 19 to 27), an auspicious period for vehicle purchases that fell in March this year and coincides with the end of the fiscal year, is expected to boost sales.
High base challenge
“We expect tractor volumes to reach around 1.15 million units in the current fiscal, mainly due to improved purchasing power due to higher MSP (minimum support prices) and the early onset of Navratri,” said AS Mittal, president, Tractor and Mechanization Association (TMA) and vice-chairman, International Tractors Ltd (ITL), maker of Sonalika tractors.
The start of Navratri in March 2026 is expected to provide a timely boost to tractor sales compared to last year as the favorable period for vehicle purchases coincides with the peak rabi harvest season and better rural cash flows, an executive working with the tractor firm said on condition of anonymity.
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According to Crisil Intelligence, the domestic tractor industry is expected to grow at a relatively subdued pace in FY27, pressured by a high base in FY26. The first half of the fiscal year may still see some growth on the back of healthy rabi production, assuming a normal monsoon and continued GST rate pressure, there may be a significant reduction, while the second half may decline significantly.
“While the growth drivers remain strong, we expect that in the second half of 2026, demand may be relatively lower due to the high comparison base in 2025, while a lot also depends on the monsoon, making it a bit difficult to predict,” said Narinder Mittal of New Holland Tractors.