Domestic tractor sales are projected to reach a record high of 975,000 units by 2026, driven by higher MSP, replacement demand and TREM V implementation. Growth of 3-5% is expected.
Higher minimal assistance costs for essential cash money plants, better replacement and building and construction demand amidst hopes of above-normal gale are most likely to drive domestic tractor sales to hit an all-time high of around 975,000 units in 2025-26, growing at 3-5 per cent, according to Crisil Ratings.
Impact of TREM IV on Tractor Sales
A comparable fad played out post the TREM IV, which was executed on January 1, 2023, when above-50 HP tractor sales went down, and farmers rotated to 41-50 HP versions– the leading sector with 64 per cent share– highlighting their level of sensitivity to price walkings, it included.
Capex Cycle in Indian Tractor Industry
A tactical capex cycle worth 4,000 crore is around the corner in the Indian tractor industry with ability exercise nearing optimal levels of 75-80 per cent and the promote cleaner technologies under TREM V, the analytics firm claimed in a declaration.
Rising quantities and relieving input prices need to maintain the operating margin of suppliers steady at 13.0-13.5 per cent this fiscal, in accordance with the previous two fiscals. With solid cash flow, low financial debt and durable liquidity, tractor manufacturers are well-positioned to buy capability and upgrade exhaust control modern technologies, it included.
Factors Driving Tractor Sales Growth
“This, in addition to the anticipated surge in MSP for key cash plants, and pick-up in construction activity, particularly roads, sustained by big federal government allotment in the Union Budget for this fiscal, should help drive 3-5 percent quantity growth for tractors this fiscal,” he kept in mind.
Crisil Scores, nevertheless, stated the spatial and temporal circulation of gale and its influence on farming and rural revenues, motion in asset costs and rate of interest, and implementation of discharge standards will certainly continue to be monitorables over the tool term.
Besides, Sethi stated, “the anticipated TREM V-driven price walks from April 2026 could activate pre-buying in the last quarter of fiscal 2026, supplying an increase to volume.”
Crisil said the rollout of stricter discharge norm TREM V throughout all horsepower (HP) sections is expected to raise tractor costs 10-20 percent, depending on engine capacity.
TREM V Impact on Tractor Costs
1 agricultural machinery2 farm equipment
3 MSP increase
4 tractor industry
5 tractor sales
6 TREM V
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