India’s commercial vehicle (CV) industry is revving up to match its pre‑pandemic high, with volumes forecast to surpass one million units this fiscal. This revival is powered by a surge in infrastructure spending, a healthy fleet replacement cycle and targeted support from the PM‑eBus Sewa scheme.
Light commercial vehicles (LCVs) will lead the charge—driven by booming e‑commerce and warehousing—while medium and heavy CVs gain traction on roads, metro projects and mining activity. Backed by strong liquidity, stable credit ratings and prudent cost management, the sector is poised for sustainable expansion.
Reaching Pre‑Pandemic Heights
In fiscal 2019, domestic CV sales hit the one million mark for the last time. After a slowdown during the pandemic, the industry is set for a full recovery, with sales expected to grow 3–5 percent this year. Renewed government focus on highways, urban transit and logistics hubs—combined with increased capital outlays—has rekindled freight demand across the country.
Infrastructure and Replacement Demand
India’s central government plans to boost capital expenditure by around 10–11 percent, accelerating the construction of roads, rail corridors and urban transit networks. This activity drives haulage requirements, underpinning M&HCV demand. At the same time, vehicles procured between 2017 and 2019 are due for retirement. With borrowing rates easing and fleet‑operator confidence returning, replacement purchases are forecast to account for roughly 20 percent of CV volumes.
Policy Tailwind: PM‑eBus Sewa
The PM‑eBus Sewa scheme—backed by a ₹57,600 crore outlay—aims to deploy 10,000 electric buses in 100 cities. While current EV bus numbers remain modest, the initiative is spurring broader interest in modern, low‑emission commercial platforms. As charging infrastructure expands, urban operators are increasingly open to upgrading entire fleets, further boosting CV sales.
Segment Leaders and Growth Rates
Light Commercial Vehicles (LCVs): Projected to capture about 62 percent of total sales, LCVs benefit from rapid e‑commerce growth and new warehousing clusters, especially in smaller cities. Annual growth of 4–6 percent is expected.
Medium & Heavy CVs (M&HCVs): Accounting for the remaining 38 percent, this segment will grow 2–4 percent, propelled by infrastructure projects in construction, cement, mining and metro‑rail sectors.
Financial Stability and Credit Outlook
The CV sector’s credit profile remains robust. Healthy freight revenues have lifted operating margins to 11–12 percent—the highest in a decade—while strong cash flows and disciplined borrowing have kept leverage low. Manufacturers and financiers report comfortable debt‑to‑EBITDA ratios near 1×, with interest coverage well above ten times, providing a solid buffer for future investment.
Compliance Costs and Price Adjustments
New regulations, such as mandatory air‑conditioned cabins on trucks from October 2025, will add roughly ₹30,000 per unit, especially affecting M&HCVs. To offset rising costs, OEMs implemented selective price hikes of 2–3 percent earlier this year, and further modest adjustments are likely to preserve margins without denting demand.
Steering Towards Sustainable Growth
India’s CV industry is not just staging a comeback—it is charting a new course toward cleaner, smarter logistics. Robust infrastructure spend, a strong replacement market and supportive schemes like PM‑eBus Sewa create a fertile ground for growth. As manufacturers invest in electric powertrains and digital fleet solutions, fleet owners and financiers have fresh avenues for investment. By marrying product innovation with evolving regulations and customer expectations, the sector can sustain its momentum and drive India’s broader agenda for efficient, low‑emission transport.