RECORD DECLINE IN MAHARASHTRA, KARNATAKA, AND TELANGANA

Tractor sales in India, which are considered a proxy for rural economic health, have seen a significant decline in key states in the west and south during the first nine months of the fiscal year. This has resulted in a 4% decrease in overall sales, making India the world’s largest market for the equipment. The decline follows record growth in FY23.

Maharashtra, Karnataka, and Telangana saw a significant decline in tractor sales of 33%, 21%, and 36%, respectively. This is the sharpest decline ever seen in these states. A 4% decline in Madhya Pradesh, the second-largest market for tractors after Uttar Pradesh, also contributed to the overall decrease. However, the increase in Uttar Pradesh tractor sales by 6% helped to balance the overall numbers.

Erratic weather conditions, an uneven monsoon due to El Nino, and inadequate rain have hurt agricultural output and farm income, leading to postponed or canceled tractor purchase plans. Lower reservoir levels, down 18% from last year and 5% below the decadal average, have also negatively impacted sentiment, according to the Central Water Commission’s report.

Agriculture accounts for three-fourths of tractor demand and is primarily driven by farmer sentiment, which is heavily influenced by the monsoon and rural income. The remaining demand comes from commercial segments such as infrastructure and mining.