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Tractor sales in India are likely to see a moderate growth of 4-7 per cent in 2025-26 on the back of a favourable monsoon forecast, which is expected to support agricultural production, ratings agency ICRA said on Wednesday.

Pre-buying ahead of the TREM V emission norms, proposed to take effect from April 1, 2026, could further aid volume growth, ICRA said in a statement.

"The industry wholesale volumes grew at 7 per cent in FY2025, aided by steady demand amid adequate rainfall. In FY2026, the industry is expected to report a growth of 4-7 per cent supported by a favourable monsoon forecast," it said.

Citing IMD (India Meteorological Department) forecast of an above-normal precipitation at 105 per cent of the long period average (LPA) during the current monsoon season as per first long-range forecast, ICRA said, favourable monsoon and increased crop production will support industry volumes.

"Further, the third advance estimates, released in May 2025, indicate a YoY increase of 7.9 per cent in kharif crop output. Rabi crop sowing also marked a YoY increase of 1.5 per cent, which provides optimism regarding improved agri-output and farm income," the ratings agency said.

In May 2025, tractor wholesale and retail volumes rose by 9.1 per cent YoY and 2.8 per cent YoY, respectively. The demand remains supported by positive farm sentiments on the back of early monsoon arrival and timely onset of kharif sowing, ICRA noted.

It, however, pointed out that commodity costs are expected to see an uptick in FY26 due to the imposition of 12 per cent tariffs on some steel imports from April 2025 coupled with an increase in domestic steel demand.

However, the credit profile of tractor manufacturers is anticipated to remain supported by likely rise in volumes, low debt and adequate cash and liquid investments, the statement said. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)