• Richa Shetty

Tractor Sales in India is Expected to Grow Up to 12% in 2021. Know the Top 4 Reasons

After initial setbacks due to the pandemic, the domestic tractor industry is expected to see positive growth in the ongoing financial year 2020-2021 after remaining in negative territory in the last fiscal year. With agriculture production is expected to register high growth in the country in the wake of sufficient rainfall during this monsoon, tractor sales volumes may grow by 10-12 percent YoY in FY21, primarily driven by a strong rural income., said a report

  • After forging ahead with strong double-digit growth for three consecutive years, the domestic tractor industry suddenly lost steam in the financial year FY20.

  • The declining volume growth is mainly due to :

  1. Sagging rural income

  2. Unpaid and discontinued subsidies and

  3. The simultaneous attack of the COVID-19 pandemic.

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Tractor Sales in India is expected to Grow Up to 12% in 2021. Know Top 4 Reasons

Indian Tractor Industry to Witness a Recovery in FY21:

  • In April and May 2020, there has been a loss of volumes due to lockdown amid the COVID pandemic. Most of this loss would recover in the coming months.

  • Thus, in FY21 Tractor volumes to witness a single-digit de-growth (around 5%). And thereafter, the tractor volume is expected to report a strong growth at around 20% for FY22. Let's Find Out: Who are the Largest Semi Truck Manufacturers in India?


Key Drivers of Expected Recovery in Indian Tractor Industry:


1. Pent-up Demand


What is Pent-up Demand?

  • Pent-up demand is a situation in which demand for a product/service rises very steeply, usually following a period of subdued spending.

  • Consumers tend to hold off or postpone making purchases during the current COVID-19 uncertainties for the last 3 months,. This postponement of purchasing decisions is building up a backlog of demand. Also, Read How can you Protect your Fleet from Winter Hazards?

  • When the signs of recovery emerge, this pent-up demand is released at one shot with the increased spending and purchases by consumers that were hold-off temporarily.

  • In the current COVID outlook, pent-up demand is an accumulation of the last 45-60 days of demand coming at one shot and starting to look good.

  • Thus, the Tractor industry volumes are expected to recover sooner than other Auto segments, led by pent-up demand from farmers. Read more about How to Check Driving License Application Status Online in India?

2. Positive Rural Sentiment:

  • The healthy Rabi Crop output, which is a key driver of Agri Demand built a positive rural sentiment.

  • Tractors are connected to the most essential Agri output.

  • Moreover, Rural markets and Agriculture is expected to witness the least COVID impact.

  • In addition, the Government’s Agri Dept announcing the Structural Reforms to Boost Farmers Income is a crucial contributing factor boosting rural sentiments.

  • Positive outlook for rural demand – Positive Harvesting Activities, Better Rabi sowing.

  • This growth momentum would continue even amid COVID on continuing resilience of agriculture and allied activities.

  • Higher reservoir levels are also supporting customer sentiments.

  • Know more about Top Reasons for Car Sales plunging in India?

3. Expectation of Good Monsoon

  • As per the Indian Meteorological Dept. – IMD’s projections, India is likely to receive average monsoon rains in 2020. Monsoon rains are expected to be 100% of the long-term average.

  • The positive Monsoon outlook is raising expectations of higher farm output in India, which is reeling from a coronavirus lockdown.

  • This good Monsoon expectation expected to augur well for Rural demand ahead.

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4. Ease of Lockdown due to COVID Pandemic

  • 50% of the Tractor Dealers resumed Operations. The currently available Stocks are in excess of 30 days.

  • As directly linked to the Agriculture Sector, most Tractor OEMs have received permission for restarting plants.

  • So, these Tractor OEMs are working to ramp up Production Levels to meet the pent-up demand expected to release soon. Here is How you can Check E-challan Status in India? (In Details)


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