Research Report

Wholesale volumes reported strong growth of 26.3% YoY in April 2026, driven by low base effect and improved affordability following the GST reduction on tractors to 5% from 12%. Following a robust growth of 23.5% YoY in FY2026, wholesale volume growth is expected to soften to 1-4% in FY2027 owing to a high base effect and the IMD’s forecast of a below normal monsoon.

• Tractor demand remained strong in April 2026: Wholesale volumes rose sharply by 26.3% YoY, while retail volumes increased by 23.2% YoY in April 2026, driven by low base effect, steady farm cash flows and improved affordability following the GST rate cut. However, pre-buying ahead of TREM V norms, which supported volumes in H2 FY2026, is expected to slow down, as the Government has deferred and staggered the implementation for the key 30-50 HP segment to April 2028 from April 2026.

• IMD forecasts below-normal rainfall in FY2027: The IMD’s first-stage Long Range Forecast (LRF) for the 2026 Southwest (SW) monsoon reflects a below-normal rainfall at 92% +/- 5% of the Long Period Average (LPA), driven by likely development of El Niño conditions during the monsoon season. Such deficient precipitation is expected to have adverse implications on agricultural output and, consequently, tractor sales.

Monthly wholesale tractor volumes (unit numbers)

Source: Vahan, Tractor Junction, ICRA Research; *MSP: Minimum support prices; ^AIF: Agriculture Infrastructure Fund