Tractor industry demand remained healthy in June 2026, with wholesale and retail volumes growing by 11.9% YoY and 25.3% YoY, respectively, supported by a low base, steady farm cash flows, and improved affordability following the GST rate reduction. However, growth is expected to moderate to 1–4% in FY2027 amid a high base effect, lower kharif acreage, and the IMD’s forecast of a below-normal monsoon, which could weigh on farm incomes and replacement demand. Despite the anticipated moderation in volumes, tractor OEMs are expected to maintain strong credit profiles, supported by healthy profitability, low leverage, and adequate liquidity.

EXHIBIT : Monthly wholesale tractor volumes (in units)

Source: VAHAN, Tractor Junction, ICRA Research; *AIF: Agriculture Infrastructure Fund