The farm equipment industry in India: tractors, implements and who earns what

01What sits inside India's farm equipment industry?

A tractor sale looks like one transaction: a farmer, a loan and a machine. Behind it stand seven businesses, from the steel mill to the village mechanic, and they earn very different returns on very different amounts of capital.

This report covers tractors, the implements they pull or drive, harvesters and threshers, power tillers, and newer machines such as spray drones. Implements are the working tools: rotavators that churn soil, cultivators, harrows, seed drills and balers. We leave out irrigation pumps and post-harvest plants, which sell to different buyers on different terms.

It is written for three readers. An MSME that makes implements and wants to grow. A dealer deciding where the next rupee of capital should go. An investor weighing listed tractor makers against the less visible businesses around them.

Every figure is as of October 2026 and every one is attributed. Where we could not confirm a number, we left it out and say so in the method note.

03Which segments make up the market?

Tractors carry most of the value, but the machines around them are where mechanisation still has room to grow. Each segment has its own buyer and its own economics.

• Tractors are sold by engine power. CRISIL puts the 25 to 75 HP band at about 90 percent of volume. Smaller tractors serve orchards, vineyards and tiny plots; tractors above 75 HP are rare outside large farms and haulage.
• Implements are easy to make and hard to scale. A welding shop can build a cultivator, which keeps the segment crowded with small regional makers. Precision machines such as seed drills and residue-management kits need tighter engineering and more capital.
• Harvesters are mostly hired, not owned. A combine costs far more than a small farmer could recover, so contractors move them from crop to crop. Labour scarcity at harvest time keeps that demand firm.
• Power tillers serve the smallest and steepest fields. These walk-behind machines suit paddy, hill farms and plots too small for a tractor. VST Tillers Tractors is the listed specialist.
• Drones and precision kits are early and subsidy-led. SMAM pays up to ₹10 lakh per drone for research institutes and farm science centres, and 75 percent for farmer producer organisations, per a July 2026 government release.

How mechanised each crop already is tells you where new machines can still sell. A Parliamentary Standing Committee found 47 percent of farm operations mechanised in August 2022, well behind China and Brazil.

Wheat is largely a replacement market now. The gaps are in sugarcane, pulses and parts of paddy, where machines must be sized for small plots and priced for farmers who will rent rather than buy. Our note on farm mechanisation in India covers the national gap in detail.

05Where does the money go along the value chain?

The chain has seven stages: raw materials, components, the powertrain, assembly under a brand, dealers, equipment finance and the aftermarket. Margins are public only for the few listed companies, so the table describes who holds pricing power rather than inventing precise margins.

Why do raw material and component suppliers have little say on price?

Steel is the largest material in a tractor, and its price is set by global and domestic markets. Tractor makers manage it with annual contracts and stock, and pass increases on with a lag. The squeeze lands on implement makers who buy steel on spot terms.

Component suppliers are better placed. Many forgers and machine shops also serve the car industry, which gives them scale and quality systems such as IATF 16949, the automotive quality standard. The safest of them sell to several tractor makers, so losing one contract does not sink them.

Why is the powertrain the hardest stage to enter?

The engine, gearbox and axles decide how a tractor performs, and they are the stage most exposed to regulation. Large brands make their own engines or borrow a partner's technology: Escorts Kubota draws on Kubota of Japan, and listed Swaraj Engines builds engines for Mahindra's Swaraj brand.

The next emission stage, known as TREM-V, needs exhaust after-treatment such as particulate filters and catalytic systems, which add cost and engineering. A draft from the road transport ministry phases it in. Tractors under 25 HP and over 75 HP move from 1 October 2026; the 25 to 75 HP band waits until FY2032.

That band is about 90 percent of volume, so the cost shock many expected in 2026 has been mostly deferred. CRISIL estimates a full rollout from April 2026 could have raised prices by 15 to 20 percent. We could not find a final notification as of mid-October 2026.

Our view: the deferral gives small tractor brands time to find a compliant engine, and the deadline still arrives. A supplier that can build compliant engines or exhaust parts before 2032 should hold a scarce position.

What does a tractor maker actually earn?

The leader earns very well at home. Mahindra's standalone farm business booked ₹36,409 crore of revenue in FY26. Its profit before interest and tax was ₹7,206 crore, a margin of 19.8 percent, per its results release of 5 May 2026.

Its consolidated farm segment, which adds overseas and non-tractor businesses, earned 13.0 percent on ₹42,568 crore. Mahindra exited three international farm businesses during the year. In short, the leader earns close to a fifth of revenue as operating profit on its Indian farm business, and much less elsewhere.

Escorts Kubota's farm machinery segment earned 12.6 percent on ₹9,779.6 crore, up from 10.7 percent in FY25.

In short, the leader earns close to a fifth of revenue as operating profit on its Indian farm business, and much less elsewhere.

CRISIL expects the tractor makers it rates to hold operating margins of 13 to 13.5 percent in FY27. It sees their capital spending at ₹5,000 crore to ₹6,000 crore, funded largely from their own cash. Scale, brand and dealer reach explain the gap between the leader and the rest.

How do dealers make money beyond the new tractor?

A dealer's margin on a new tractor is thin, and the stock he must carry ties up capital. The steadier income comes from the workshop, the genuine parts counter, used tractors taken in part-exchange, and fees for arranging insurance and loans.

New-tractor sales follow the monsoon. Service and parts follow the fleet already in the district, which keeps working in a bad year. A dealer whose income leans on the workshop is far better placed in a downturn than one who lives on new sales.

Why does finance decide how many tractors sell?

With about 95 percent of tractors bought on credit, the lender's appetite sets the ceiling on volume. Lending comes from captive arms such as Mahindra Finance, from finance companies with rural branches, and from banks and regional rural banks under priority-sector rules.

A captive lender has an edge: it sees its parent's dealers, service records and resale prices, so it can price risk on a tractor it knows. Mahindra Finance reported gross stage-3 loans, its measure of seriously overdue loans, at 3.41 percent in FY26 across its whole book.

The risk runs the other way too. When rural lenders tighten after defaults rise, tractor sales fall with them, whatever the monsoon does.

Why is the aftermarket the steadiest earner?

Every tractor needs filters, tyres, clutch plates, seals and periodic overhauls for a decade or more. With most sales replacing an older machine, the fleet in use is large and ageing, and parts demand follows the fleet, not the season's sales.

The trade runs through dealer counters, independent distributors, village mechanics and a growing number of online parts sellers. Fake and low-grade parts circulate in rural markets, and a failure is easily blamed on the tractor rather than the part. Genuine-parts reach is therefore a brand question as much as a revenue one.

Across the chain, the pattern is clear even where exact margins are not public. Brand owners and lenders hold the most power, parts and service earn high margins on modest capital, and raw material suppliers earn least.

07Do custom hiring centres make money?

A custom hiring centre (CHC) is a village-level rental business: it owns tractors and implements and hires them to farmers by the hour or the acre. The government part-funds them so that small farmers can mechanise without buying.

A July 2026 government release counts 27,554 CHCs, 25,608 farm machinery banks and 646 hi-tech hubs set up under SMAM. Separately, CEEW reports over 40,000 CHCs established in 2018 to 2024 under the crop residue scheme, which runs in Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Delhi.

The subsidy is generous. The crop residue scheme pays 80 percent of machine cost for centres run by cooperatives, farmer producer organisations, panchayats and rural entrepreneurs, and 50 percent for individual farmers. Under SMAM, an individual's centre has long received about 40 percent of project cost.

The real question is how many days the machines work. CEEW's field study of 65 Punjab centres found high machine ownership but limited uptake by farmers. Our note on custom hiring centres examines that utilisation gap.

A simple illustration shows why utilisation decides everything. Take a centre whose machines cost ₹25 lakh, with 40 percent subsidy, so the owner funds ₹15 lakh. Assume fixed costs of ₹5 lakh a year for loan interest, machine wear, insurance and a retained driver.

Assume each day of hire earns ₹8,000 and costs ₹3,000 in diesel and running costs. Each hired day then contributes ₹5,000 towards those fixed costs.

Sowing and harvest windows are short, so 100 working days is harder than it sounds. The centres that pay are those that serve two or three crops, take haulage work in the gaps, or fill idle weeks through a booking network. A subsidy lowers the number of days a centre must work to break even. It does not fill those days.

A subsidy lowers the number of days a centre must work to break even. It does not fill those days.

09Which companies lead the tractor market?

Mahindra leads through two brands, Mahindra and Swaraj, with 42.57 percent of FY26 retail registrations between them. On its own count of domestic dispatches, the company held 43.6 percent, its highest ever. It reports 5,05,930 domestic tractors for the year.

TAFE, which sells the Massey Ferguson brand in India, and Sonalika, made by Punjab-based International Tractors, are privately held. Escorts Kubota is listed, with Kubota of Japan as promoter, and has sold its railway business to Sona Comstar, leaving farm and construction machines.

Escorts Kubota sold 1,33,670 tractors in FY26 on its own count, including exports, up 15.7 percent. John Deere and CNH are the two global groups in the top ranks.

For investors, the listed choice is narrow. Mahindra & Mahindra, Escorts Kubota and VST Tillers Tractors make machines; Swaraj Engines makes engines. Mahindra & Mahindra Financial Services lends against tractors, and tyre makers such as Balkrishna Industries sell farm tyres.

11What could hurt the industry in the next two years?

The record year sets a high base, and the near-term risks lean towards demand. The structural ones lean towards cost and credit.

Two of these deserve a closer look. The first is the monsoon. IMD's end-of-season data put 2026 rainfall at 87 percent of the long-period average, with the east and north-east hit hardest and the south close behind.

North-west and central India were close to normal, which shields the biggest tractor markets for now. Retail registrations were still up about 20 percent in the first half of FY27. The test is rabi sowing and the months after it, when a weak season usually shows up in loan applications.

The second is credit. With nearly every tractor financed, a rise in rural defaults reaches the showroom within a season. Dealers who rely on a single lender, and buyers without a credit history, are the first to feel it.

One more pressure sits outside the table. Specialised machines such as large harvesters and precision kits still come partly from abroad. We examine that in our note on India's agricultural machinery imports.

13Frequently asked questions

How big is the farm equipment market in India?

By volume, dealers registered 10,50,077 tractors in FY26 (FADA), and factories dispatched about 11.6 lakh. By value, our rough estimate puts domestic tractors at ₹75,000 crore to ₹85,000 crore at factory prices. Implements, harvesters and parts come on top, without a reliable public total.

Which are the listed farm equipment companies in India?

Mahindra & Mahindra, Escorts Kubota and VST Tillers Tractors make farm machines, and Swaraj Engines makes tractor engines. TAFE, Sonalika's maker International Tractors, and the Indian arms of John Deere and CNH are not listed.

Is a tractor dealership business profitable?

It can be, but rarely on new tractors alone. The margin on a new unit is thin and swings with the monsoon. Dealers that do well earn steadily from the workshop, genuine parts, used tractors and finance referrals.

How fast is the tractor industry in India growing?

Retail registrations grew about 19 percent in FY26 and dispatches about 23.5 percent, a record year. CRISIL forecast flat to 2 percent growth for FY27 in March 2026. Retail was still up about 20 percent in April to September 2026, before the weak monsoon fully showed.

What is the market share of tractor companies in India?

On FY26 retail registrations, the Mahindra group held 42.57 percent (Mahindra 23.81, Swaraj 18.76), Sonalika 12.76, TAFE 11.27 and Escorts Kubota about 10.90. CNH had about 4.49 percent, and all others, including John Deere, about 18 percent.