India's tractor sales to touch all-time high of 9.75 lakh units in FY26

This will be supported by an expected above-normal monsoon, higher minimum support prices (MSPs) for key cash crops and better replacement and construction demand.

With the new TREM V emission norms1 expected from April 1, 2026, pre-buying towards fiscal end may also provide a fillip to volume.

As a result, tractor sales this fiscal are expected to surpass the peak of 9.45 lakh units achieved in fiscal 2023, sustaining the back-to-back volume growth seen during fiscal 2019.

There was a healthy 7 per cent increase in tractor sales in fiscal 2025, said the report.

The Indian Meteorological Department's forecast of above-normal monsoon should lift rural sentiment and reinforce farmer confidence, which is crucial for driving farm investments such as tractors.

"This, along with the expected rise in MSP for key cash crops, and pick-up in construction activity, especially roads, supported by sizeable government allocation in the Union Budget for this fiscal, should help drive 3-5 per cent volume growth for tractors this fiscal," said Anuj Sethi, Senior Director, Crisil Ratings.

Besides, the anticipated TREM V-driven price hikes from April 2026 could trigger pre-buying in the last quarter of fiscal 2026, providing a boost to volume, he added.

Rising volumes and easing input costs should keep the operating margin of manufacturers stable at 13.0-13.5 per cent this fiscal, in line with the past two fiscals.

With strong cash flow, low debt and robust liquidity, tractor makers are well-positioned to invest in capacity and upgrade emission control technologies.

A Crisil Ratings analysis of five tractor original equipment manufacturers (OEMs), accounting for over 90 per cent of industry volumes, indicates as much. Agriculture contributes to 70-75 per cent of tractor volumes and construction and related activities contribute the balance.

According to Poonam Upadhyay, Director, Crisil Ratings, tractor manufacturers have entered fiscal 2026 on a strong footing with margins stable at 13-13.5 per cent on softer input costs and sustained volume growth.