India's Tractor Industry Plows Ahead With Record Production And Domestic Sales In FY23

In Financial Year 2023, India's tractor industry achieved record-breaking production of one million units and its highest-ever domestic sales, while exports experienced a slight year-on-year decline.

FY23 saw 12 per cent growth in domestic tractor volumes, with 945,311 units compared to 842,266 in FY22, according to Tractor and Mechanization Association (TMA) data.

“We saw reasonably robust demand supported by some good drivers of demand with respect to both agriculture conditions as well as the prices for the farmers. Inflation woes, however, posed a challenge for most of the year,” Mallika Srinivasan, Chairman and Managing Director, TAFE (Tractors and Farm Equipment), told Businessline.

According to Rohan Kanwar Gupta, Vice President and Sector Head, Corporate Ratings at ICRA, the domestic volumes of 9.45 lakh units in FY23 marked the highest-ever for the industry. This is a noticeable increase from the previous peak in FY21 (8.99 lakh units).

Gupta attributes the growth to a rise in wholesale volumes during Q4 FY23 as original equipment manufacturers (OEMs) stocked up on inventory in preparation for strong rabi season sales.

Domestic tractor sales rose to 210,858 units in Q4, up by 19 per cent YoY. March sales also surged to 82,856 units (from 72,888 units) with production at 83,948 units.

During FY23, Mahindra & Mahindra experienced a 16 per cent increase in domestic volumes, with 389,531 units sold. Escorts Kubota Ltd saw a 9.4 per cent growth with 95,266 units sold, while Sonalika Tractor's domestic volumes grew 15 per cent to 116,000 units sold.

Tractor production in the country reached 1,071,310 units in FY23, showing a marginal increase from 9.61 lakh in FY22 and 9.65 lakh in FY21. Exports, which saw good demand in FY22, declined marginally to 124,542 units from 128,636 units in FY23.

According to Skymet, a private weather forecasting agency, India may experience "below normal" monsoon rains in 2023. Although the IMD has not yet released its prediction. As a result, tractor volume growth this fiscal could be impacted by the combination of the high-base effect of FY23 and deficient monsoon precipitation.