TAFE, one of India’s leading tractor manufacturers, is planning to establish its fifth tractor manufacturing facility in north India, with an investment of up to ₹1,250 crore.

The proposed greenfield plant will have an annual production capacity of around 60,000 tractors and is expected to be completed within approximately 18 months once the location is finalised. The facility will be TAFE’s first new greenfield manufacturing plant in nearly three decades.

TAFE currently operates four tractor manufacturing facilities with a combined annual capacity of around 2.6 lakh tractors. The new plant is expected to increase the company’s overall manufacturing capacity to approximately 3.2 lakh tractors annually. Also read the New Tractor Launches Expected in 2026 blog at Krishi Vikas.com

TAFE to Add 60,000-Tractor Production Capacity

The exact location of the new plant has not yet been announced, although TAFE has confirmed that it will be located in a north Indian state. According to TAFE Chairperson and Managing Director Mallika Srinivasan, the additional capacity is being planned to meet expected demand from both domestic and international markets. The company also sees further opportunities to expand its exports and intends to scale production in line with market demand. The new facility is expected to strengthen TAFE’s manufacturing footprint in northern India while supporting its broader growth strategy.

TAFE’s Existing Manufacturing Network

TAFE currently has four tractor manufacturing plants in India. Its flagship facility in Chennai began operations in 1961, followed by the Doddaballapur plant near Bengaluru in 1981. The company added its Kalladipatti facility near Madurai in 1997.

TAFE’s fourth tractor manufacturing facility is located in Bhopal. It became part of TAFE’s manufacturing network following the company’s acquisition of Eicher’s tractor business in 2005.

Together, these facilities provide TAFE with an annual tractor production capacity of approximately 2.6 lakh units. The TAFE Group also has an important manufacturing presence in Rajasthan. Through TAFE Motors, the company has partnered with German engine manufacturer DEUTZ AG to manufacture diesel and internal-combustion engines at its Alwar facility. The plant has an annual production capacity of up to 30,000 engines.

Strong Tractor Sales Support Capacity Expansion

TAFE’s decision to increase manufacturing capacity comes after a strong performance in the previous financial year. The company sold around 2.14 lakh tractors, while its domestic business recorded growth of approximately 24.8%. Revenue for the broader TAFE Group, which includes its plastics and engineering plastics businesses serving the automotive sector, approached ₹16,000 crore, representing nearly 25% growth. TAFE Vice Chairperson Lakshmi Venu attributed the strong performance to several factors, including favourable monsoon conditions, supportive government measures and the reduction in GST on tractors. Improved demand also came from first-time tractor buyers, while some existing owners upgraded to higher-horsepower and premium tractor models.

TAFE Strengthens Position in the 41–50 HP Segment

TAFE has also expanded its presence in the 41–50 HP tractor segment, which represents an important portion of India’s tractor market.

According to Crisil data, TAFE held an 18% share of the overall Indian tractor market during the first nine months of FY26, compared with 44% for Mahindra & Mahindra.

TAFE’s position has been particularly strong in the 41–50 HP category. Its share in this segment increased from below 50% in FY20 to around 63% by the end of FY25, according to Crisil.

Tractors in this power range are widely used for applications including agricultural operations, haulage and certain construction activities.

The reduction in GST on tractors from 12% to 5% in September 2025 also provided additional support to tractor demand.

Tractor Market Growth

Despite strong sales in the previous year, the Indian tractor industry could see slower growth in the current period.

Crisil had projected tractor sales growth of around 0–2%, with total industry volumes expected to reach approximately 1.2 million units. The moderation was attributed to demand normalisation following a strong year and concerns surrounding weather conditions, including the potential impact of El Niño.

TAFE, however, expects its own revenue to grow by around 10% during the current financial year.

The company has indicated that concerns over a severe El Niño impact have eased, with rainfall conditions improving after a relatively dry June.

TAFE Continues to Compete With Mahindra

Mahindra & Mahindra remains India’s largest tractor manufacturer and continues to hold a significant lead in the domestic market.

Mahindra sold approximately 5.35 lakh tractors in the previous year. They also announced plans for a major manufacturing facility in Nagpur, involving an investment of around ₹15,000 crore over 10 years across automotive and tractor operations.

TAFE’s planned ₹1,250-crore plant therefore comes as the country’s tractor industry remains highly competitive. With manufacturers investing in additional capacity, new products and export markets.

TAFE Completes AGCO Stake Acquisition

TAFE has also undergone a significant change in ownership structure.

The company acquired the 20% stake previously held by US-based agricultural machinery manufacturer AGCO for approximately $260 million (around ₹2,300 crore).

AGCO owns global agricultural equipment brands including Massey Ferguson and Fendt. Following the transaction, TAFE became a wholly owned subsidiary of the Chennai-based Amalgamations Group.

The transaction brought an end to a long-standing partnership between TAFE and AGCO that lasted around 65 years. TAFE continues to remain AGCO’s largest single shareholder.

TAFE is privately held and does not publicly disclose the same level of financial information as listed companies. The company is currently debt-free and has no immediate plans for an IPO.

What TAFE’s New Plant Means for the Tractor Industry

The proposed fifth manufacturing facility will add approximately 60,000 tractors of annual capacity to TAFE’s existing production network.

Once operational, the plant could take TAFE’s total annual manufacturing capacity from around 2.6 lakh to approximately 3.2 lakh tractors.

The expansion reflects the company’s focus on strengthening its position in the domestic market while increasing its ability to serve international customers.

For India’s tractor industry, the investment also highlights the continued focus on manufacturing capacity, higher-horsepower tractors, exports and farm mechanisation despite expectations of more moderate industry-wide growth.

Krishi Vikas Take

TAFE’s planned ₹1,250-crore investment signals continued confidence in India’s long-term tractor and farm mechanisation market. The additional 60,000-unit capacity could improve TAFE’s ability to serve growing demand in northern India and international markets.

For farmers, the expansion could eventually mean greater availability of tractor models and increased competition among manufacturers. However, tractor selection should continue to be based on factors such as landholding, crops, horsepower requirements, implements, financing costs and local dealer support—not simply on brand or production capacity.