Skyrocketing Tractor Sales: India Gears Up for Record Growth by 2026

India's tractor sales are projected to peak at 9.75 lakh units by 2026, exceeding previous records. This surge is driven by favorable monsoon conditions, increased crop MSPs, and pre-buying before new emission norms. CRISIL's report highlights the agricultural sector's dominance and optimistic forecasts for manufacturers.

India's domestic tractor sales are set to achieve an unprecedented milestone, with projections estimating shipments to reach approximately 9.75 lakh units by fiscal 2026. This marks a significant 3-5% growth from the prior year, according to CRISIL Ratings.

The forecast indicates that the surge is primarily fueled by anticipated favorable monsoon conditions, elevated minimum support prices (MSPs) for essential cash crops, and a consistent rise in both replacement and construction demand. This projection surpasses the previous high of 9.45 lakh units recorded in fiscal 2023 and continues a growth trend observed since fiscal 2019.

As reported, the domestic tractor industry experienced a robust 7% growth in fiscal 2025, laying a solid foundation for continued expansion. While agriculture remains the predominant driver, accounting for 70-75% of demand, a noteworthy 25-30% stems from construction and related sectors.

In anticipation of the new TREM V emission norms effective from April 1, 2026, pre-buying could further bolster sales volumes before costs climb by 10-20% due to regulatory changes. History reflects a similar pattern post-TREM IV norms, underscoring buyer sensitivity to price hikes.

CRISIL's analysis spans five leading original equipment manufacturers (OEMs), which wield substantial market influence, controlling over 90% of industry volumes. These manufacturers are strategically positioned for growth due to their strong cash flows and financial health, enabling investments in capacity expansion and emission technology upgrades.

Operating margins for tractor manufacturers are projected to remain steady between 13.0-13.5% through fiscal 2026, supported by increased volumes and easing input costs, enhancing the sector's overall economic resilience.

(With inputs from agencies.)