New Delhi, March 5 -- India's tractor industry is likely to witness muted growth over the next few years as concerns around a weaker monsoon weigh on rural demand, though strong reservoir levels and replacement demand could provide some support, according to a report by HSBC Global Investment Research.

The report noted that the sector's outlook has turned subdued due to the anticipated impact of El Nino, which historically tends to weaken monsoon conditions and negatively affect tractor sales.

"Historically, El Nino years or the subsequent year are associated with declines in tractor volumes," the report said.

Despite this risk, water reservoir levels across India remain about 24 per cent above the long-term average, which could partly...