New Delhi: A favourable Southwest monsoon, Goods and Services Tax (GST) reduction, and Chaitra Navratri festival, which is considered an auspicious period for vehicle purchases falling in March this year, is expected to push domestic tractor sales to an all-time record high of 1.17 million units in the current fiscal, said Hemal Thakkar, director, Crisil Intelligence.

With rural demand showing signs of revival and policy support remaining favourable, the tractor industry appears poised for one of its strongest performances in recent years, with festival-driven sentiment giving a strong push to dispatches.

Domestic tractor sales have already recorded a 21% jump in the first 10 months of the current fiscal year, with 978,137 units being sold between April 2025 and January 2026, compared to 808,237-unit sales during the same period last year, according to Tractor and Mechanization Association(TMA) data. TMA represents manufacturers of tractors, farm machinery and agricultural mechanisation equipment.

Calendar year 2025 has seen strong growth in tractor demand, reflecting strong rural fundamentals, improved farmer incomes and continued investment in mechanization, said Narinder Mittal, president and managing director, CNH India—makers of New Holland tractors.

With improved rainfall boosting kharif production and strengthening rural cash flows, a normal and well-distributed monsoon typically raises demand for mechanisation, particularly in the key agricultural states of Uttar Pradesh, Maharashtra, Madhya Pradesh, Chhattisgarh, Rajasthan and Karnataka.

Likewise, stronger Rabi sowing is expected to sustain the sector's positive momentum. Also, the GST rationalisation has lowered acquisition 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. Domestic tractor sales were at 939,725 units in FY25 compared to 867,085 units in FY24, according to TMA data.

The major tractor manufacturers in the country are Mahindra & Mahindra, Tractors and Farm Equipment Ltd (Tafe), International Tractors Ltd (makers of the Sonalika brand of tractors), Escorts Kubota, John Deere, and CNH (makers of New Holland Tractors).

Crisil Intelligence projects domestic tractor sales to grow by 22-24% year-on-year (y-o-y) in fiscal 2026, reaching a record volume of 1.15-1.17 million units, driven by a confluence of favourable factors.

"An above-average monsoon season, with rainfall 8% above normal, has strengthened agricultural conditions and supported tractor demand. Replacement demand originating from the strong sales cycle during fiscals 2017-2019 has also materialized in the current year, providing additional volume support," said Hemal Thakkar, director, Crisil Intelligence.

The recent reduction in GST rates on tractors from 12% to 5%, coupled with ongoing government financing schemes in a few key states, has further stimulated demand, Thakkar said. Strong reservoir levels are likely to aid Rabi crop production, expanded Kharif acreage, and increased government crop procurement have further sustained the growth momentum.

India's southwest monsoon, which lasts from June to September, resulted in bumper crop production. India's kharif foodgrain output is expected to rise to 173.33 million tonnes in 2025-26, according to the first advance estimates released by the Union agriculture ministry on 26 November.

Also, stronger Rabi sowing is expected to sustain the sector's positive momentum. India's rabi or winter crop sowing in 2025-26 has increased by more than 1.82 million hectares to 66.04 million hectares as on 23 January, according to data released by the ministry of agriculture and farmers' welfare. The sown area is 2.8% higher than a year ago. The season's average coverage is 63.78 million hectares.

According to Prof. Sudhir Panwar, farm expert and former member of the Uttar Pradesh Planning Commission, farmers are investing in machinery to boost productivity and reduce labour dependence, given the scarcity of cheap labour. "As workers migrate from villages to cities for construction, manufacturing and services jobs, farm labour availability declines. This pushes farmers to adopt mechanisation—especially tractors—to complete sowing, ploughing and harvesting on time."

States such as Tamil Nadu, Karnataka, parts of Maharashtra, Gujarat, Punjab, Haryana, Madhya Pradesh, and western Uttar Pradesh are witnessing mechanisation-led growth in tractor sales amid rising rural wages and seasonal labour migration to urban centres, according to experts.

Tractor dealers said that the policy measures and good kharif crop have boosted rural sentiments.

"Following the GST reduction, we witnessed a significant boom in sales. We are now banking on the harvesting 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.

Also, tractor industry experts said that Chaitra Navratri (19 to 27 March), an auspicious period for vehicle purchases, falling in March this year, and coinciding with the fiscal year-end is expected to boost sales.

The start of Navratri in March 2026 is expected to provide a timely boost to tractor sales compared to last year, as the auspicious period for vehicle purchases coincides with the peak rabi harvesting season and improved rural cash flows, said a senior executive working with a tractor manufacturing firm on condition of anonymity.

According to Crisil Intelligence, the domestic tractor industry is expected to grow at a relatively muted pace in fiscal 2027, under pressure from a high base in fiscal 2026. The first half of the fiscal year may still see some growth on account of healthy rabi output, assuming a normal monsoon and the lingering effect of the GST rate cut, while the second half may see significant pressure.

While growth drivers continue to be strong, we expect that in H2 of 2026, demand may be relatively lower, due to the high base effect of 2025, while a lot also depends on the monsoon, and hence it is a bit difficult to predict," said Narinder Mittal of New Holland tractors.