Tractor sales are expected to grow at 11-13% during 2017-18, according to CRISIL Research, an independent research house.
It has indicated a healthy growth in tractor sales despite monsoon slowing down in August and the pace of sowing coming down. According to CRISIL Research, farm sentiments still remain marginally positive.
Tractor sales in August scaled to 40,765 units, highest recorded numbers for August till date.
‘Near normal monsoon’
“Near normal monsoon (6% below long period average, as on September 13) and early advent of the festive season led to a pick-up in the industry sentiments. A favourable start to the Kharif sowing season on account of surplus rainfall till July also helped in providing an upward momentum to tractor sale,’’ it said.
The strong August number must be read in the wake of a positive farm output expectations and early onset of Dussehra and Diwali.
These had prompted OEMs (original equipment manufacturers) to increase channel inventories, the report said.
“The 2017-18 fiscal began with a consistent growth of 10-15% in tractor sales, mainly on the back of a strong Rabi harvest (8.5% growth over 2016-17) as favourable monsoon filled up the reservoirs, and a quick recovery from demonetisation improved farm sentiments,’’ the CRISIL Research report said.
The announcement of farm loan waivers in some key States (Uttar Pradesh, Maharashtra, Punjab, and Karnataka) also helped to push demand for tractors as agricultural loan liabilities started reducing, it added.
CRISIL Research expected incremental demand from loan waivers to come mainly from Uttar Pradesh, Maharashtra and Punjab.
Uneven sales
Though the pan-India growth from April-August is at 13%, state-wise increase in sales had been uneven, it said. States in the southern and eastern regions registered decline mainly on account of a slowdown in commercial demand and delay in release of subsidy for tractors, it pointed out.
“Some States in the southern region, which are dependent on subsidy sales, have witnessed sharp de-growth,’’ it said.
Nevertheless, CRISIL Research expected a temporary burst in sales once subsidy got released in bulk.
