Tractor Sales in India Show Double-Digit Growth Fueled by Strong Agricultural Sector

Synopsis

Mahindra & Mahindra has reported a continuous double-digit growth in tractor sales for three months, driven by a surge in the agricultural sector, which experienced a robust kharif crop and increased government support. This positive trend is expected to continue into FY25, contributing to an overall GDP growth projection of 6.5%.

Key Takeaways

Mahindra & Mahindra reports a 19% sales increase in February.
Strong kharif crop and favorable monsoon conditions boost agriculture.
Government support through increased MSP enhances farmers' income.
GDP growth projected at 6.5% for FY25.
RBI expected to lower key rates to stimulate economic growth.

Mumbai, March 6 (NationPress) As the agricultural sector experiences significant growth in the ongoing financial year, Mahindra & Mahindra has achieved a remarkable double-digit increase in tractor sales for the third consecutive month in February.

Following a 19 percent sales boost in February, the company anticipates that this robust momentum will extend into the final quarter of 2024-25 (FY25), as stated by M&M’s Farm Equipment Sector President Hemant Sikka during an interview with a business news channel.

Sikka noted a considerable level of optimism in the agricultural sector, attributed to a strong kharif crop this year, bolstered by favorable monsoon conditions. This has resulted in reservoir water levels reaching a 10-year high, which will further benefit the rabi crop sown in winter.

He also emphasized that the government’s support for the agricultural sector, including an increase in Minimum Support Prices (MSP) for essential crops, has significantly enhanced farmers' earnings. Additionally, a reduction in the inflation rate for farmers is expected to provide them with increased financial resources. These factors are collectively driving a heightened demand for tractors, he added.

For the financial year 2024-25, GDP growth is projected at 6.5 percent due to the thriving agricultural sector, which has shown a strong growth rate of 5.6 percent in Q3, compared to a 1.5 percent increase in the same quarter last year, as reported by Bank of Baroda.

The report further anticipates that the RBI will decrease key rates to stimulate economic growth, as inflation continues to decline.

It highlights that the RBI’s monetary policy committee has unanimously reduced the repo rate by 25 basis points from 6.5 percent to 6.25 percent, maintaining a neutral stance. The RBI Governor indicated the necessity for a 'less restrictive' monetary policy to foster growth, as inflation remains within the bank's targeted range. The central bank projects growth to improve in FY26 to 6.7 percent from 6.4 percent in FY25, with inflation expected to drop to 4.2 percent in FY26 from 4.8 percent in FY25. The CPI is anticipated to remain relatively stable in Q4FY25 (4.4 percent) and Q1FY26 (4.5 percent).