The tractor market in India is projected to expand by 4-7 percent in FY2026, while the two-wheeler sector is also anticipated to experience robust growth, according to a recent report released on Tuesday. This forecast is bolstered by factors such as above-average rainfall, increased rural incomes, festive demand, and recent reductions in GST rates that are expected to enhance affordability and stimulate sales, as outlined by data from rating agency ICRA. The tractor sector has already demonstrated a strong performance in FY2026 to date. Wholesale volumes increased by 28.2 percent year-on-year (YoY) in August 2025, and cumulative growth for the initial five months of the fiscal year reached 11.7 percent.
Retail sales in August also surged by 30.1 percent compared to the same month last year, indicating positive farmer sentiment and favorable rainfall conditions. India has received 108 percent of its long-period average rainfall by September 17, which has positively impacted agricultural activities and rural demand. ICRA stated that the recent reduction in GST rates on tractors to 5 percent will further enhance demand during the upcoming festive period. Additionally, the industry is preparing for potential pre-buying ahead of the implementation of TREM V emission regulations, scheduled for April 1, 2026. Tractor manufacturers are expected to sustain strong financial health, supported by consistent demand, operational efficiencies, and stable raw material prices.