Record-breaking Year for Indian Tractor Industry: Over 1 Million Units Produced in FY23

The Indian tractor industry smashed a couple of records in FY23 - producing over a million units for the first time ever and also achieving their highest ever domestic sales.

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

According to Mallika Srinivasan, Chairman & Managing Director of TAFE (Tractors and Farm Equipment), there was strong demand due to favorable agricultural conditions and good prices for farmers. However, inflation issues were a challenge throughout the year.

According to Rohan Kanwar Gupta, Vice President & 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 surged by 19% in Q4 to 210,858 units, up from 177,608 units in Q4 FY22. In March alone, sales reached 82,856 units, surpassing 72,888 units in March 2022, while production stood at 83,948 units.

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

The country produced a total of 1,071,310 tractors in FY23, showing an increase from 9.61 lakh in FY22 as well as in FY21. Exports, on the other hand, decreased slightly to 124,542 units in FY23 from 128,636 units in the previous fiscal due to lower demand.

Gupta stated that El Nino may occur over June-December 2023, affecting monsoon precipitation and dampening industry demand this fiscal. Various global weather forecasting agencies predict this.

According to Skymet, 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.