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India's retail vehicle sales rose 20% in September, a dealers' body said on Monday as it forecast a strong festive season, with easing monsoon worries and higher rural demand helping sentiment.

With a 42-day festive season just around the corner, the Federation of Automobile Dealers Association (FADA) also said it shifted its stance from 'cautiously optimistic' to 'optimistic'.

India's festive season usually sees strong retail purchases, which FADA hopes will ease inventory buildup.

It added that favourable monsoon patterns, with India receiving 94% of the expected rainfall, set a positive backdrop for the period.

Retail sales of vehicles rose 20.4% in September to 1,882,071 units, with passenger vehicle (PV) volumes increasing 19%, FADA data showed.

Two-wheeler sales jumped 21.7%, as the segment benefitted from the introduction of new models and attractive promotional offers, while a recovery in rural demand also improved sentiment.

Sales of three wheelers, meanwhile, rose 48.6% to 102,426 units, surpassing record highs hit in July and August.

However tractor sales, is a key indicator of rural economy, fell 10% in September. Last week, tractor maker Escorts Kubota reported an 11.2% fall in its total sales.

Automaker Mahindra and Mahindra also reported a 1% fall in tractor sales. However, Mahindra's Swaraj division posted a 12.3% rise in sales.

FADA also issued caution around highest-ever inventory levels and said inventory days - an indicator of retail demand - ranged from 60-65 days in September for PVs, up from 58-63 days in August.

Higher inventory days indicate dealers are storing vehicles for longer before being able to sell them.