India’s second-largest tractor maker, Tractors and Farm Equipment Ltd (TAFE), is preparing for one of its most significant manufacturing expansions in decades, with plans to invest up to ₹1,250 crore in a fifth tractor plant in northern India.
The proposed facility, expected to have an annual production capacity of around 60,000 tractors, would be TAFE’s first greenfield tractor manufacturing plant in 29 years. The expansion comes after a strong year in which the company sold about 2.14 lakh tractors and recorded group revenue of nearly ₹16,000 crore.
TAFE Chairperson and Managing Director Mallika Srinivasan has indicated that the company sees opportunities beyond the domestic market and is adding capacity with international expansion in mind.
The final location of the proposed northern India plant has not yet been announced.
A new manufacturing chapter after nearly three decades
TAFE currently has four tractor manufacturing facilities with a combined annual production capacity of around 2.6 lakh tractors. The proposed fifth plant would add a further 60,000 units of capacity, significantly expanding the company’s manufacturing base.
According to information shared by the company, the new facility is expected to be established in northern India, although the exact state is still under consideration.
The project is expected to take around 18 months to come up once implementation moves ahead, with the total investment estimated at up to ₹1,250 crore.
For TAFE, the decision marks a major return to greenfield expansion. Its last greenfield tractor facility was established nearly three decades ago, while subsequent additions to its manufacturing footprint have included expansion and acquisitions.
The company’s existing manufacturing locations include:
- Chennai, home to its flagship plant, established in 1961.
- Doddaballapur near Bengaluru, established in 1981.
- Kalladipatti near Madurai, established in 1997.
- Bhopal, which became part of TAFE after the acquisition of Eicher’s tractor business in 2005.
The proposed new plant would therefore represent a major long-term investment in additional tractor production.
Domestic demand and exports drive the expansion
TAFE’s planned capacity addition is being driven by confidence in both Indian and international markets.
Mallika Srinivasan has said the company expects international opportunities to remain an important part of its future growth strategy. Additional capacity could allow TAFE to serve growing demand in domestic markets while improving its ability to supply overseas customers.
India is already one of the world’s largest tractor-producing countries, and Indian manufacturers have increasingly expanded their global reach. Manufacturers such as TAFE operate in an industry where export demand can provide an important additional growth channel beyond the cyclical nature of domestic farm machinery sales.
The new plant is expected to strengthen TAFE’s footprint in northern India while also giving the company greater manufacturing flexibility.
A breakout year for tractor sales and revenue
The proposed investment follows a strong financial and operational year for TAFE.
According to the company’s leadership, domestic growth reached approximately 24.8%, while the company sold around 2.14 lakh tractors during the year.
Revenue across the wider group, including TAFE and its subsidiaries operating in areas such as plastics and engineering plastics, approached ₹16,000 crore.
The performance represented one of the strongest periods for the company and has contributed to confidence around future capacity expansion.
Several factors supported tractor demand during the period, according to TAFE Vice Chair Lakshmi Venu.
These included:
- A favourable monsoon.
- Changes in GST rates affecting the sector.
- Farmer-focused initiatives introduced by some state governments.
- Stronger participation from first-time tractor buyers.
- Increasing demand for more premium and higher-specification tractors.
The combination of rural conditions, policy changes and consumer demand helped support a sharp increase in tractor sales.
First-time buyers and premiumisation reshape demand
One of the most important trends highlighted by the company is the changing nature of tractor demand.
TAFE has seen greater participation from first-time buyers, while customers are also showing an interest in upgrading to higher-end products.
The move towards more premium tractors reflects a broader change in how farm equipment is being used. Tractors are no longer viewed only as machines for traditional cultivation. They are increasingly deployed for haulage, construction-related activity and other commercial applications.
This wider use can influence the type of machinery farmers and rural entrepreneurs choose to purchase.
Compact and mid-range tractors are particularly important in this transition, as they can serve multiple applications while remaining suitable for a range of farm sizes.
TAFE gains ground in the popular 41-50 HP segment
TAFE has also strengthened its position in the 41-50 horsepower tractor segment, one of the most important categories in the Indian market.
According to a Crisil analysis cited in the available information, TAFE’s presence in this segment expanded significantly over the past several years.
The company’s share in the segment increased from below 50% in FY20 to around 63% by the end of FY25, according to the cited analysis.
The segment has benefited from demand for tractors that can be used for multiple purposes, including agricultural work, transport and other applications.
A reduction in the GST rate on tractors—from 12% to 5% in September of the previous year, according to the information provided—also made tractor purchases more attractive to buyers.
TAFE expects around 10% revenue growth in FY27
Despite a strong previous year, TAFE expects growth to moderate as the industry adjusts to a higher base.
Mallika Srinivasan said the company could target revenue growth of around 10% in FY27, supported by longer-term structural factors despite the possibility of slower growth compared with the previous year.
Weather remains a major variable for India’s tractor industry. Earlier concerns about an El Niño-related impact had created uncertainty, but improved rainfall during July and August helped strengthen the outlook, according to the company’s assessment.
The outlook for tractor sales depends heavily on rural income, monsoon conditions, agricultural output and broader economic activity.
Industry growth may moderate after a strong period
The broader tractor industry could see a period of slower growth after the strong expansion of the previous year.
Crisil has projected relatively modest industry growth, with tractor sales potentially rising by around 0-2% to approximately 1.2 million units, according to the information cited.
The projection reflects a possible normalisation of demand following a high base and concerns around emerging weather patterns.
At the same time, rural demand indicators remain important for the sector.
Higher minimum support prices, progress in kharif sowing and improvements in monsoon conditions have helped support rural sentiment, according to market commentary cited in the information provided.
This creates a mixed environment: structural demand remains supportive, but annual growth rates may moderate after a particularly strong year.
Mahindra remains the market leader
TAFE operates in a highly competitive tractor industry.
Mahindra & Mahindra (M&M) remains the country’s largest tractor manufacturer, with reported sales of 5,34,507 units during the period referenced.
M&M is also expanding its manufacturing presence. The company announced plans in February to establish an auto and tractor manufacturing facility in Nagpur, with a proposed investment of ₹15,000 crore over 10 years.
The large-scale investments by major manufacturers underline the long-term importance of India’s farm machinery sector.
While competition remains intense, Mallika Srinivasan has also pointed to the collaborative dimension of the industry, where long-standing relationships among promoter families and companies have coexisted with commercial rivalry.
Rajasthan remains important to TAFE’s manufacturing ecosystem
TAFE’s manufacturing operations extend beyond tractors.
Through subsidiary TAFE Motors, the group has partnered with German engine manufacturer DEUTZ AG to produce diesel and internal-combustion engines at its Alwar facility in Rajasthan.
The plant has the capacity to manufacture up to 30,000 engines annually, according to the information available.
This broader industrial footprint gives the group exposure to multiple manufacturing and engineering segments.
TAFE’s businesses also include interests linked to plastics and engineering plastics, which supply the automotive industry.
Mother-and-daughter leadership at the centre of expansion
The latest expansion plans have drawn attention to the leadership partnership between Mallika Srinivasan and her daughter, Lakshmi Venu.
As Chairperson and Managing Director, Mallika Srinivasan has overseen TAFE’s strategic direction, while Lakshmi Venu, as Vice Chair, has become an important part of the group’s next generation of leadership.
Lakshmi Venu has also spoken about the changing image of agriculture and the role of women in the sector.
During visits to dealers and customers, she has demonstrated her ability to operate a high-horsepower tractor, including driving a straight furrow in a 65 HP machine.
Her message reflects a broader vision of an agricultural sector where women can independently own, manage and operate land and machinery.
As mechanisation expands, the customer base for farm equipment is also becoming more diverse. This could influence product design, dealership networks, financing and training in the years ahead.
TAFE completes a major ownership restructuring
Alongside its manufacturing expansion, TAFE has undergone a significant corporate ownership development.
The privately held company acquired a 20% stake previously held by AGCO, a US-based agricultural equipment manufacturer associated with brands including Massey Ferguson and Fendt.
The transaction was valued at approximately $260 million, or around ₹2,300 crore, based on the information available.
The deal resulted in TAFE becoming a wholly owned subsidiary of the Chennai-based Amalgamations Group.
Despite the transaction, TAFE’s relationship with AGCO remains significant. The companies have had a long-standing business relationship spanning approximately 65 years.
Mallika Srinivasan has described the arrangement as mutually beneficial, while also noting that TAFE and its leadership continue to hold a significant investment interest in AGCO.
According to the figures cited in the available information, the 16.3% stake held by Mallika Srinivasan and TAFE in AGCO was valued at around $1.3 billion at the time referenced.
No IPO plans as TAFE remains debt-free
TAFE remains privately held and, according to the information available, is currently debt-free.
The company has not indicated plans to raise capital through an initial public offering.
Because TAFE’s financial statements are not publicly filed in the same way as those of listed companies, detailed profitability figures are not publicly available through the information referenced.
The company’s reported revenue growth and capacity plans nevertheless provide an indication of the scale of its ambitions.
Rather than seeking public-market funding, TAFE appears to be pursuing its next major expansion from a position of financial strength.
What the fifth plant means for TAFE
The planned northern India facility could become one of the most important manufacturing investments in TAFE’s recent history.
The proposed 60,000-unit annual capacity would increase the company’s ability to respond to future demand in one of India’s largest agricultural regions.
The investment could also provide:
- Additional production capacity for domestic sales.
- Greater support for export markets.
- Improved access to northern Indian tractor markets.
- More manufacturing flexibility.
- Potential employment and industrial development in the state eventually selected.
- Capacity to support the company’s growth in important tractor segments.
The project’s significance is amplified by the fact that it would be TAFE’s first new greenfield tractor plant in nearly three decades.
A long-term bet on Indian and global agriculture
TAFE’s ₹1,250 crore expansion plan comes at a time when the tractor industry faces both opportunity and uncertainty.
Strong rural sentiment, agricultural mechanisation and international opportunities are supporting the long-term outlook. At the same time, tractor sales remain dependent on weather, farm income, government policy and the broader rural economy.
For TAFE, the decision to add another 60,000 units of annual production capacity suggests confidence that the industry’s long-term opportunities outweigh near-term cyclical risks.
The final location of the new northern India facility is still awaited, and project execution will be closely watched by the agricultural equipment industry.
For now, however, TAFE’s strategy is clear. After a strong year of sales and revenue growth, the company is preparing for its next stage of expansion—with Mallika Srinivasan and Lakshmi Venu placing a major bet on the future of India’s tractor market and the company’s growing global ambitions.
