New Delhi, Sep 23 (NationPress) The tractor sector in India is projected to witness a growth of 4-7% in FY2026, with the two-wheeler industry also anticipated to experience robust growth, according to a report published on Tuesday.

This optimistic forecast is attributed to favorable factors such as above-average rainfall, enhanced rural incomes, festive demand, and recent reductions in GST rates, which are likely to improve affordability and stimulate sales, as per data compiled by the rating agency ICRA.

The tractor market has demonstrated a strong performance so far in FY2026, with wholesale volumes increasing by 28.2% year-on-year (YoY) in August 2025, and cumulative growth for the initial five months of the fiscal reaching 11.7%.

Retail sales in August also saw a remarkable 30.1% increase compared to the same month last year, indicating positive sentiment among farmers and healthy rainfall.

India has reported receiving 108% of the long-term average rainfall until September 17, which has positively impacted agricultural activities and rural demand.

ICRA noted that the recent reduction in GST rates on tractors to 5% is expected to further enhance demand during the forthcoming festive season.

The industry is also gearing up for potential pre-buying activities ahead of the implementation of TREM V emission norms effective April 1, 2026.

Tractor manufacturers are likely to maintain solid financial standings, encouraged by steady demand, operational leverage, and stable raw material prices.

In the two-wheeler sector, wholesale volumes increased by 7.2% YoY in August, totaling 1.8 million units, as companies ramped up dispatches in anticipation of the festive season.

However, retail sales in August rose by only 2.2% as excessive rainfall in certain areas led customers to delay purchases in hopes of benefiting from GST reductions. A stronger recovery in demand is expected during the festive season.

Exports have also bolstered the segment, with overseas shipments rising by 27.5% in August compared to the same period last year.

Electric two-wheeler sales continued their upward trajectory, with 104,725 units sold in August, marking a 1.8% increase from the previous month.

The penetration of electric vehicles in the two-wheeler category remained stable at approximately 6-7%, according to the rating agency.

Looking ahead, ICRA forecasts that domestic two-wheeler volumes will grow by 6-9% in FY2026.

The report states that this growth will be driven by replacement demand, recovery in urban markets, robust rural incomes due to favorable monsoon conditions, and the recent GST cuts that will enhance vehicle affordability.