India’s Tractor Industry Eyes 1 Million Sales Milestone in 2026

India, the world’s largest tractor manufacturer with a thriving agricultural economy, is set to surpass the 1 million mark in domestic tractor sales by 2026, driven by a strong rabi and kharif season and favorable monsoon conditions. Despite challenges such as the expected cost increases following the implementation of the TREM V emission norms in the same year, industry leaders remain optimistic.

In the financial year 2023, the tractor industry achieved record sales of 945,000 units, setting a benchmark yet to be surpassed. However, sales in FY24 declined by 7% to 876,000 units, largely due to a high base effect and an uneven monsoon.

During the first half of 2024-25, the industry's volume remained nearly flat at 472,000 units, compared to 469,000 units in the same period the previous year. Domestic tractor sales surged by 35.9% in February to 58,797 units, bringing total sales for April-February to 859,767 units—a 7% year-on-year increase.

Industry leaders expect this upward trend, which began in the second half of the year, to continue, with domestic sales likely to surpass 1 million units by 2026. "I am very confident that next year (2025-26), the industry will surpass the 1 million mark. Reaching that milestone would not only be a huge achievement for the industry but also for India as a key player in the global tractor market,” said Hemant Sikka, President of the Farm Equipment Sector at Mahindra and Mahindra Ltd. & Co-Chair of FICCI’s National Agriculture Committee, in an interview with Autocar Professional.

Globally, approximately 2 million tractors are sold annually, with India remaining the largest tractor market. Experts predict the industry will experience significant growth by 2030, driven by rising food demand and the expansion of agricultural land.

To achieve the 1 million mark, industry leaders are reflecting on several favorable factors in the second half of 2024-25. These include a good monsoon, leading to increased rabi and kharif crop production, a rise in the minimum support price (MSP), positive terms of trade, and increased government spending.

“If you look at factors such as a good monsoon and reservoir levels, back-to-back increases in kharif and rabi production, positive terms of trade, and the government sitting on a lot of dry powder to spend in the second half of 2024-25, along with an increase in MSP, we are seeing a strong uptick in rural sentiment. Farmers are increasingly willing to invest in assets such as tractors,” Sikka explained.

“The near-term outlook for the industry remains upbeat, aided by the robust output of most kharif crops. Healthy reservoir storage levels are likely to be favorable for rabi sowing and crop yields,” said Rohan Kanwar Gupta, Vice President and Sector Head of Corporate Ratings at ICRA Limited.

Data from the Ministry of Agriculture and Farmers’ Welfare indicates a significant rise in the production of key kharif and rabi crops in 2024-25.

Kharif rice production is estimated at 1,206.79 lakh tonnes, reflecting an increase of 74.20 lakh tonnes from 2023-24. Meanwhile, wheat production, a major rabi crop, is estimated at 1,154.30 lakh tonnes—marking a rise of 21.38 lakh tonnes compared to the previous year.

Kharif crops are sown between June and July and harvested from October to November, whereas rabi crops are sown from October to December and harvested between January and February, depending on their growth cycles.

In 2024, the government raised the MSP for 14 key kharif crops for the 2024-25 marketing season. The MSP for kharif paddy was increased to ₹2,300 per 100 kg, up from ₹2,183 in 2023-24, while maize saw a rise of ₹135, reaching ₹2,225.

Similarly, the MSP for six key rabi crops, including wheat and gram, was raised for the 2025-26 marketing season. The MSP for wheat increased by ₹150 to ₹2,425 per 100 kg, while gram saw a ₹210 hike, reaching ₹5,650.

The increase in MSP aims to improve farmers’ income, create positive rural sentiment, and boost agricultural growth and tractor sales. A farmer's profit is determined by the gap between input and output costs, both of which are rising.

“Currently, the terms of trade are also favorable for farmers. While input costs, including raw materials, had risen earlier, they are now on a downward trend, while output prices remain strong. With cheaper inputs and steady output prices, farmers are in a strong financial position,” Sikka explained.

ICRA expects the domestic tractor industry’s volumes to grow at a moderate pace of 3-6% in the financial year 2025. Even though the industry is expected to continue recording moderate growth in 2025-26, the pace will remain sensitive to monsoon performance, a key driver of farm income and sentiment in the country.

During the 2024 southwest monsoon season (June-September), India received above-normal rainfall at 108% of its long-period average (LPA), according to the India Meteorological Department (IMD).

The monsoon core zone, which includes the country's key rain-fed agricultural regions, saw rainfall at 122% of the LPA. “If we get one more good monsoon…then you kind of get into a very strong momentum, which is likely to happen next year, and I am very positive about that,” Sikka said.

Sikka also noted that innovations such as lightweight tractors, designed for specific applications rather than traditional multi-utility models, are expected to further fuel growth. This expansion into new market segments will help drive the industry toward its ambitious target.

However, the TREM V emission norms, likely to be launched in April 2026, may pose a challenge in achieving the 1 million sales mark. The industry is awaiting the final draft of the norms from the Ministry of Road Transport and Highways.

The Bharat Stage TREM V norms are expected to impose strict limits on particulate matter (PM), nitrogen oxides (NOx), hydrocarbons (HC), and carbon monoxide (CO), significantly reducing emissions from diesel engines—the primary fuel used in tractors across the country.

There are concerns that these regulations could drive up tractor costs and impact customer sentiment. Manufacturers have been urging the government to delay their implementation.

CNH India President and Managing Director Narinder Mittal believes that while the new emission norms may cause a short-term dip in demand, the domestic tractor industry is set to surpass the 1 million mark in the long run.

However, according to Bharat Madan, Whole-time Director and Chief Financial Officer at Escorts Kubota, if the TREM V draft is delayed, there will be no pre-buying, which could reduce sales and make the 1 million mark less achievable by next year.

The government's draft will specify which horsepower (HP) tractors will be affected by the TREM V norms. The new emission regulations are expected to drive up tractor prices, potentially reducing sales in the impacted HP segment and influencing overall tractor market demand.