Tractor Industry Prepares ₹6,000 Crore Capex Amid Slow Growth

India’s tractor industry is preparing to invest around ₹6,000 crore in FY27, even as domestic sales growth is expected to remain low at 0–2%. Instead of cutting spending, companies are focusing on exports, new technology, and global platforms.

Strong Financial Position Supports Investment

According to CRISIL, most tractor companies are in a strong financial position with steady margins of 13–13.5% and low debt. This allows them to continue investing even during a slow demand period.

Mahindra & Mahindra is expected to lead the investment, contributing nearly half of the total capex. The company plans to invest ₹2,000–2,500 crore in its farm equipment business, including a large manufacturing plant in Nagpur to support global platforms.

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Companies Increase Focus on Exports and Technology

Other companies are also increasing their global focus. Escorts Kubota has approved a ₹2,268 crore plant in Uttar Pradesh to strengthen exports. TAFE and Sonalika Tractors are working on tractors for overseas markets, while John Deere and CNH are investing in advanced farming technologies.

Slow Growth Expected, Policy Relief Helps

After a strong FY26 with around 22% growth, the industry is now expected to slow down. CRISIL estimates growth of only 0–2% next year. Good water levels may support early demand, but risks like El Niño could affect sales later. A delay in TREM-V emission norms has also helped the industry. If implemented earlier, tractor prices could have increased by 15–20%. Overall, tractor makers are now planning for long-term growth by focusing on exports and global markets, instead of depending only on domestic demand.

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