Tractor industry's volume growth likely to ease to 1-4% in FY27 from 23.5% in FY26: Icra
Ratings agency Icra said that the tractor industry's volume growth is likely to ease to 1-4 per cent in the current financial year (FY27) from 23.5 per cent in FY26, on account of a high base effect and a forecast of a below-normal monsoon. It stated that the Indian Meteorological Department's (IMD's) first-stage long-range forecast (LRF) for the 2026 Southwest Monsoon projects below-normal rainfall owing to the expected El Nino conditions.
It noted that recent IMD rainfall data (from June 2026) also indicates precipitation deficits across parts of central, southern and coastal India. Moreover, it said that prolonged rainfall shortfalls could adversely affect kharif crop production and farm incomes, thereby posing downside risks to tractor demand and sales.
According to Icra, tractor wholesale volumes grew 11.9 per cent year-on-year in June 2026, while retail sales jumped 25.3 per cent in June 2026, supported by a low base, steady farm cash flows and improved affordability after the GST rate cut (last September). However, it said, volume growth is expected to moderate over the remainder of FY27 owing to the high base of FY26, lower kharif acreage, and weak monsoon outlook, which could adversely affect farm incomes and replacement demand.
