TAFE Expands Tractor Capacity With ₹1,250 Cr Investment in New Plant

TAFE, India’s second-largest tractor maker, is planning to expand its manufacturing capacity with a new tractor plant in north India. The company will invest up to ₹1,250 crore in its fifth manufacturing facility, which will have a production capacity of around 60,000 tractors a year.

TAFE’s new plant will be its first greenfield facility in 29 years. Currently, the company operates four plants with a combined production capacity of 2.6 lakh tractors. This expansion follows a strong year, during which tractor sales reached around 2.14 lakh units and group revenue rose nearly 25% to ₹16,000 crore. 

TAFE Plans 5th Tractor Plant in North India

TAFE plans to set up its fifth tractor manufacturing plant in a north Indian state, although the exact location is yet to be decided. The facility will have a production capacity of around 60,000 tractors a year and is expected to be ready within 18 months. According to a company executive, TAFE will invest up to ₹1,250 crore in the project.

Mallika Srinivasan, Chairperson and Managing Director of TAFE, said the company is adding this capacity because it expects strong demand from both Indian and international markets. She also said the company is confident about growing its international business and will add capacity faster as domestic and export demand remains strong.

TAFE currently has a total production capacity of 2.6 lakh tractors across four manufacturing plants. The new facility will add another 60,000 units and is expected to strengthen the company’s presence in north India.

TAFE’s Four Existing Tractor Plants

TAFE currently operates four tractor manufacturing plants in India. Its flagship facility in Chennai was established in 1961, while its Doddaballapur plant near Bengaluru was set up in 1981. The company later added the Kalladipatti plant near Madurai in 1997.

TAFE’s fourth plant is located in Bhopal and was added after the company acquired Eicher’s tractor business in 2005. Together, these four facilities give TAFE an annual production capacity of 2.6 lakh tractors.

Rajasthan is another important manufacturing base for the TAFE group. Through its subsidiary TAFE Motors, the company has partnered with German engine maker DEUTZ AG to manufacture diesel and internal combustion engines at its Alwar plant. The facility can produce up to 30,000 engines every year. TAFE sold around 2.14 lakh tractors last year and expects the new plant to further increase its presence across north India.

Strong Sales Drive TAFE’s Expansion

The decision to add new capacity comes after a strong financial year for TAFE. The company recorded 24.8% growth in its domestic business and sold around 2.14 lakh tractors. When TAFE and its subsidiaries are combined, including its plastics and engineering plastics businesses that supply products to the automobile industry, group revenue came close to ₹16,000 crore.

Lakshmi Venu, Vice Chairperson of TAFE, said several factors supported this growth. Good monsoon rainfall helped farm demand, while the government’s GST rate cut also gave a boost to the tractor industry. Some state governments also introduced measures to support farmers.

These factors encouraged many first-time buyers to purchase tractors. At the same time, some existing tractor owners upgraded to higher-powered and premium models.

Lakshmi Venu also spoke about her regular visits to dealers and customers. During these visits, she demonstrates that she can drive a straight furrow using a 65-HP tractor. She said this reflects her view that women can also manage farms and operate tractors on their own.

TAFE Gains Share in 41-50 HP Segment

TAFE expects its revenue to grow by around 10% in the current financial year. Mallika Srinivasan said concerns over El Niño causing a major impact have reduced. June was the driest month, but the situation did not appear as serious as expected, while rainfall improved in July and August.

However, TAFE expects some moderation in growth because of the strong performance recorded in the previous year. According to Crisil, TAFE held an 18% share of the Indian tractor market during the first nine months of FY26, while Mahindra & Mahindra held 44%.

TAFE has also increased its share in the 41-50 HP tractor segment, one of the most popular power categories in India. Crisil said TAFE’s share in this segment was below 50% in FY20 but increased to 63% by the end of FY25.

The GST reduction also supported demand in this segment. The government reduced GST on tractors from 12% to 5% in September last year. Tractors in this power range are widely used for farming, haulage and construction work.

Despite this growth, the overall tractor market may see slower sales this year. Crisil said in a note dated 18 March that tractor sales growth could slow to 0-2%, with total sales expected to reach around 1.2 million units. The agency linked this expected slowdown to normalising domestic demand after a strong year and concerns over the El Niño weather pattern.

TAFE Faces Mahindra Rivalry and Ownership Changes

Mahindra & Mahindra remains India’s largest tractor maker. The company sold 5,34,507 tractors last year and continues to lead the domestic market. In February, it also announced plans to set up an auto and tractor manufacturing facility in Nagpur, with an investment of ₹15,000 crore over 10 years.

Mallika Srinivasan said India is one of the largest tractor-producing countries in the world. She also said the market is highly competitive, while companies can still work together to create more opportunities. She pointed to the long-standing relationships between promoters and promoter families in the tractor industry.

Along with its manufacturing expansion, TAFE has also gone through a major ownership change. The company bought a 20% stake held by US-based agricultural machinery maker AGCO for around $260 million, or about ₹2,300 crore. AGCO owns brands such as Massey Ferguson and Fendt.

After the transaction, TAFE became a wholly owned subsidiary of the Chennai-based Amalgamations Group. Mallika Srinivasan said TAFE and AGCO had a successful partnership that lasted 65 years and described the transaction as beneficial for both sides. She also said TAFE remains AGCO’s largest single shareholder.

As of Friday, the 16.3% stake held by Mallika Srinivasan and TAFE in AGCO was valued at around $1.3 billion. TAFE was founded by Mallika Srinivasan’s grandfather, S. Anantharamakrishnan.

The privately held company does not file its financial statements with the Ministry of Corporate Affairs, so its exact profitability is not publicly known. TAFE is currently debt-free and has no plans to raise funds through an initial public offering (IPO).

With the fifth plant, TAFE plans to add around 60,000 tractors to its annual production capacity. The facility is expected to support the company’s growth in north India and its plans to expand tractor exports.

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