​​​​​​​India's Tractor Market Grows 28% Y-o-Y in August; GST Cut Likely to Spur Festive Sales

India's domestic tractor market recorded robust 28% year-on-year growth in August 2025, driven by positive rural sentiment, good monsoon progress, and a favorable policy environment. Sales, however, remained flat compared to July 2025, indicating a pause in momentum ahead of expected festive demand. In the coming months, momentum is expected to grow with festivals and the new GST cut to 5%.

According to the Tractor and Mechanization Association (TMA), domestic tractor sales in August stood at 64,322 units, up from 50,134 units a year earlier. Sales were flat from July 2025. Export volumes in August rose to 8,877 units from 8,599 units in July, reflecting a 3.2% increase.

Mahindra & Mahindra Ltd.'s Farm Equipment Business (FEB) maintained its leadership position with 26,201 tractors sold in August, registering a 28% year-on-year rise. The company attributed this to favorable monsoon conditions and buoyant rural sentiment ahead of the festive season. However, sales were slightly down from July 2025's 26,990 units.

Including exports, Mahindra's total sales for the month reached 28,117 units, up 28% from 21,917 units in August 2024. Export volumes contributed 1,916 units, a sharp 37% increase year-on-year.

Veejay Nakra, President of the Farm Equipment Business at Mahindra, noted, "The above-normal monsoon and improved reservoir levels are encouraging not just for the current Kharif crops but also bode well for the upcoming Rabi season."

However, he cautioned that the India Meteorological Department's (IMD) forecast of surplus rainfall in September could pose risks to the Kharif harvest in some regions, urging careful management.

Nakra added that the combination of favorable agro-climatic conditions and continued government support through farmer financing schemes is likely to fuel tractor demand during the festive season.

Industry Outlook

According to a recent ICRA report, India's tractor industry is projected to grow by 4–7% in FY26, supported by good monsoon distribution and positive farm sentiment. While overall retail sales declined slightly by 1% in FY25, recent months have shown signs of strong recovery. In July 2025 alone, wholesale volumes rose 8% year-on-year.

Escorts Kubota Ltd. also reported solid performance, with domestic sales in August at 7,902 units, a 26.6% increase compared to the same month last year. Export volumes surged 35.5% to 554 units. The company attributed the growth to timely and widespread rains, high reservoir levels, and an early start to the festive buying season. Kharif sowing has already surpassed last year's acreage, further reinforcing optimism.

GST Cut to 5%

In a significant policy move, the GST Council reduced the tax rate on tractors and farm machinery from 12% to 5%, effective immediately. This 7-percentage point cut is expected to reduce tractor prices and boost rural mechanization.

Most tractors now fall under the 5% GST bracket, except for road tractors used for pulling semi-trailers with engine capacity over 1,800 cc, which are now taxed at 18%—down from the earlier 28%.

Bharat Madan, Whole-Time Director and CFO at Escorts Kubota, said, "The GST reduction from 12% to 5% is substantial. It translates into savings of ₹40,000 to ₹60,000 per tractor, making them more affordable and likely to stimulate demand."

He added, "While the transition may cause short-term disruption, such as delayed purchases until after September 22 and working capital challenges for dealers, these are temporary hurdles. In the medium to long term, the GST cut is demand-accretive and will enhance farm mechanization, productivity, and rural incomes."