According to the report by CRISIL Research, domestic tractor sales are expected to close in fiscal 2017 with impressive 16%-18% growth, riding a monsoon-led surge in demand that was enough to offset the impact of demonetization in the latter half.
October saw a record 44% spurt, lifting sales for April-October by a whopping 26%.
The fervour could have continued, going by the inventory with distributors, but for the demonetization move. Transactions in rural areas, which account for most domestic tractor sales, are largely cash-based. With cash drying up, sales took a beating – with a de-growth of 13% in November and a modest growth of 7% in December and 5% in January.
Maharashtra, Madhya Pradesh, and Uttar Pradesh are expected to drive demand. Andhra Pradesh and Telangana would drive growth in the peninsular region. Karnataka and Tamil Nadu could experience stress for a while; the overall region should perform well, given normal monsoons and a consistent pace of rural development activities.
Moreover, Tractor sales rose 16% against an all-India increase of 13%. Incidentally, UP is India's largest market for motorcycles and tractors, accounting for 15% of the total sales volumes.
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