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Ratings agency ICRA expects a 1-4 per cent YoY growth in domestic tractor volumes in FY22 amid an evolving Covid-19 situation.

"Even as uncertainty with regard to the evolution of the pandemic exists, the underlying demand drivers for the industry remain intact. Expectations of healthy rabi cash flows, continuation of various Government support programmes, healthy financing availability and a normal monsoon forecast, are likely to aid farm sentiments," the agency said.

"In addition to strong agri demand, haulage demand has improved significantly over the past few months, led by continued push of the government on developing rural infrastructure; the same is likely to support industry volumes," it added.

According to Rohan Kanwar Gupta, Vice President, ICRA, aided by healthy cash flows across regions and monsoon performance, the tractor industry had seen a strong surge in wholesale volumes since the relaxation of lockdowns in previous fiscal, helping the industry volumes register a growth of 27 per cent.

"Rural sentiment, which had been a beacon of hope in the first wave of the pandemic, was expected to continue to remain buoyant. However, with the sudden and severe onset of the second wave of the pandemic, the growth momentum of the industry has been impeded to an extent," he said.

Besides, rural sentiments have also been impacted by the spread of infections into the hinterlands in the current wave, he said.

"However, unlike other automotive segments, there were no major production shutdowns taken by OEMs for tractors. With lockdowns being relaxed across most regions in June, the industry's wholesale and retail volumes are expected to witness a marked improvement from this month onwards," Gupta said.

Earlier, ICRA had made a forecast of 4-6 per cent growth in volumes for FY22; in view of the impact of the second wave, the same has been revised downwards to 1-4 per cent.