Tractor Wholesale Volume May Grow 15-17% this Fiscal: ICRA

Wholesale volume of tractors is expected to grow 15-17% this fiscal as against an earlier estimate of 8-10%, on the back of supportive factors, including GST reduction, which enhanced affordability for farmers, ICRA said on Friday.

This revision is based on the industry's robust performance in recent months, including 30.1% year-on-year growth in wholesale volumes for November this year and a cumulative growth of 19.2% for the April-November period, it said.

The ratings agency attributed the improved outlook to a combination of supportive economic and regulatory factors that have strengthened demand fundamentals.

The revised forecast highlights a period of strong recovery and expansion for the tractor sector, driven by concrete policy support, favourable agricultural outcomes, and specific market dynamics related to regulatory changes.

A primary driver has been the reduction of GST on tractors to 5%, a policy change that has directly enhanced affordability for farmers, ICRA said. This reduction has translated into decrease in tractor prices, with savings of ₹40,000 to ₹1 lakh across different horsepower segments, making new tractors more accessible.

Moreover, the overall adequate rainfall has supported crop sowing and yield expectations, contributing to healthier farm cash flows and positive rural sentiment, the ratings agency said.

The additional factor expected to influence sales in the coming quarters is the impending transition to the stricter tractor emission norms from April 1 next year, it said.

With the new norms, ICRA anticipates a phase of pre-buying activity as customers and dealers look to acquire tractors under the current, familiar emission standards.