Mahindra Expects No Growth in India's Tractor Market in FY27 as Rain Deficit Hits Demand

Mahindra & Mahindra now expects India's tractor industry to remain largely flat in FY27. Back in July, the company had projected growth of around 5%. It lowered the estimate because of poor monsoon rainfall, strained farm incomes and rising input costs.

What led to the lower forecast

The southwest monsoon closed at 87% of the long-period average, and water stored in reservoirs was 16% below normal as of 15 October. Maharashtra and Karnataka were the worst affected, with rainfall falling short by 19% and 30% respectively. Mahindra also pointed out that the cost of farm inputs has gone up faster than the prices farmers get for their crops, which has reduced their spending power. Rajesh Jejurikar, who leads Mahindra's auto and farm business, said the company had not expected reservoir levels to be this weak.

How Mahindra's tractor business performed in July-September 2026

Between July and September, Mahindra's tractor sales, including exports, dropped 6% year-on-year to around 1.16 lakh units. Its domestic market share slipped by 150 basis points to 41.5%. Profit before interest and tax (PBIT) from the core tractor business fell nearly 15% to ₹1,345 crore, compared with ₹1,574 crore a year earlier, while revenue held steady at ₹7,652 crore. 

The PBIT margin shrank to 17.6% from 20.6%. Higher prices of steel, base metals and rubber added to the pressure. Mahindra raised prices by about 4% between April and August 2026, but this was not enough to cover the cost increase.

Six-month and October sales

Looking at April to September 2026, Mahindra sold 2,74,068 tractors, up 7% from the same period last year. Domestic sales grew 6% to 2,62,872 units, while exports climbed 16% to 11,196 units. In October, domestic dispatches fell 13% to 62,626 units. The company said this was mainly due to Diwali coming in November this year rather than October. Across April to October, domestic sales were still 2% higher at 3,25,498 units.

Other industry views

Escorts Kubota expects tractor industry volumes to decline by double digits in the second half of FY27 and to shrink slightly over the full year. ICRA estimates that domestic tractor wholesale volumes will grow by 1-4% in FY27, much lower than the 23.5% growth recorded in FY26.

What Mahindra expects ahead

Mahindra expects its tractor margins to face more pressure in the December quarter, improve in the January-March quarter and return to normal levels in FY28. To support profitability, it plans to adjust prices, refresh its products, increase exports and restructure its international farm subsidiaries.

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