The domestic tractor industry is expected to recover in the second half of the current financial year (H2 FY25), driven by strong reservoir levels following a good monsoon and an increase in the minimum support price (MSP) for key rabi crops. Analysts predict a 10-11 per cent growth in tractor sales during H2 FY25, partly due to a low base effect (as sales in H2 FY24 had declined) and favourable agricultural sentiment. The first half of FY25 saw flat wholesale sales, with 472,079 units sold compared to 469,383 units in H1 FY24. For FY24, total tractor sales in India amounted to 874,504 units, down 7 per cent from the previous year's 940,985 units. This drop was mainly attributed to the poor monsoon that impacted kharif crop production and agricultural activities. Raman Mittal, Joint Managing Director of International Tractors Limited (ITL), shared with Business Standard that the tractor industry saw a robust resurgence during the festive season, driven by a mix of factors that boosted farmer sentiment. “Despite a slow start to the monsoon, exceptional rainfall—108 per cent of the expected precipitation from June to September 2024—helped significantly raise reservoir levels, surpassing the 10-year average by 14 per cent. This led to strong growth in the Southern market,” Mittal explained. He also highlighted the record kharif harvest and promising rabi sowing season, supported by a favorable La Niña effect that helped stabilise temperatures, as key contributors to the sector’s growth prospects. “These factors have led to a revision of industry projections, with H2 FY25 now expected to see growth instead of the flat performance initially predicted,” Mittal said. ITL achieved its best-ever monthly sales in October, selling 20,056 units. Market leader Mahindra & Mahindra (M&M) shares a positive outlook, forecasting 13-15% growth for H2 FY25. Rajesh Jejurikar, Executive Director and CEO (Auto and Farm Sector) at M&M, noted during the company’s second-quarter results that “green shoots” are emerging in the tractor industry. Contributing factors include an 8% surplus in rainfall, reservoir levels at 87%, and increased kharif output. “Good reservoir levels, higher MSP for key rabi crops, positive farmer sentiment, and healthy cash flows are all supporting tractor demand. We expect the progress in rabi sowing and a strong rabi crop to further drive demand,” said Hemant Sikka, President of M&M’s Farm Equipment Sector. M&M reported a 9 per cent year-on-year (YoY) growth for the April-October period, selling 248,060 units in the domestic market. The company saw a 30 per cent increase in domestic wholesales in October. A November report from Yes Securities projected a 10-11 per cent growth in retail tractor sales for H2 FY25. The report pointed to positive trends such as favorable terms of trade, improved subsidy announcements, and strong farm sentiment in regions like Maharashtra, Gujarat, Uttar Pradesh, Rajasthan, Madhya Pradesh, and South India. However, East India (West Bengal and Bihar) remains under pressure due to monsoon deficiencies. Kotak Institutional Equities also indicated that demand trends in H2 FY25 would remain strong, with double-digit YoY volume growth. Overall, M&M has forecast a 6 to 7 per cent YoY growth for domestic tractor industry volumes in FY25.