Domestic tractor wholesale volumes likely to register modest growth of 1-4% in FY27: ICRA

Ratings agency ICRA in its latest report, has said that domestic tractor wholesale volumes are expected to register a modest growth of 1-4% in the current fiscal year (FY27) as compared to the robust 23.5% growth recorded in FY26.

It said the expected slowdown is attributed to the high base effect and the India Meteorological Department's (IMD) forecast of a below-normal monsoon. Despite the expected moderation in volumes, it said tractor manufacturers are likely to maintain healthy profit margins, supported by operating leverage and stable raw material costs.

According to the report, tractor demand remained strong in May 2026, with the wholesale volumes increasing sharply by 19.3% year-on-year, and retail volumes rising by 13.6% YoY during the month. The growth was driven by a low base effect, steady farm cash flows and improved affordability following the GST rate cut. However, it said volume growth is expected to slow down, as the government has deferred and staggered the implementation for the revised emission norms (led to pre-buying in FY26) for the key 30-50 horsepower segment to April 2028 from April 2026.

ICRA further noted that the IMD's first-stage Long Range Forecast (LRF) for the 2026 southwest monsoon indicates a below-normal rainfall at 90% +/- 4%of the Long Period Average (LPA), driven by likely development of El Nino conditions during the monsoon. It added that any rainfall deficiency could adversely affect agricultural output, and thereby weighing on tractor demand during FY27.