According to CRISIL Ratings, domestic tractor sales in India are expected to reach approximately 9.75 lakh units in fiscal 2026, representing a 3-5% increase over the previous year. The projected growth is attributed to a combination of factors, including the likelihood of an above-normal monsoon, a possible increase in minimum support prices (MSPs) for key crops, and steady demand from the replacement and construction segments.
Sales are expected to surpass the previous high of 9.45 lakh units recorded in fiscal 2023, following a 7% increase observed in fiscal 2025. CRISIL’s analysis suggests that pre-buying activity in the final quarter of fiscal 2026—prior to the implementation of the new TREM V emission norms from April 1, 2026—may also contribute to the rise in volumes.
Stable input costs and rising volumes are expected to keep operating margins for manufacturers between 13.0-13.5%, similar to recent fiscal years. With low debt levels, strong liquidity, and healthy cash flows, major manufacturers are positioned to continue investing in production capacity and emission technology upgrades.
CRISIL’s review of five key original equipment manufacturers (OEMs), collectively accounting for over 90% of the market, indicates that agriculture continues to contribute 70-75% of tractor demand, with the remainder coming from construction-related activities.
Anuj Sethi, Senior Director at CRISIL Ratings, said that forecasts of a favourable monsoon and higher MSPs, along with infrastructure activity supported by government spending, could reinforce demand. Additionally, anticipated price increases due to TREM V norms might lead to advance purchases.
TREM V regulations are expected to increase prices by 10-20%, depending on engine capacity. During the earlier rollout of TREM IV norms, a similar trend was observed, where buyers shifted from above-50 HP tractors to the 41-50 HP category, which currently accounts for 64% of the market.
Poonam Upadhyay, Director at CRISIL Ratings, added that tractor makers are entering fiscal 2026 with stable financials and near-optimal capacity utilisation levels of 75-80%. A capital expenditure cycle of around Rs 4,000 crore is expected, although the capex-to-Ebitda ratio is likely to remain below 0.25 times.
Key areas for observation over the medium term include the distribution and timing of monsoons, their impact on rural incomes and agriculture, movements in commodity prices and interest rates, and the rollout of new emission regulations.