India’s commercial vehicle sector is poised for steady growth driven by technological innovation, evolving regulations, and infrastructure expansion, signalling a transformative decade ahead for logistics and transportation.
India’s commercial vehicle (CV) industry is definitely riding a strong growth curve and seems pretty well set to keep expanding steadily all the way through 2030. This positive outlook is largely due to a mix of solid economic fundamentals, changing rules and regulations, and some pretty rapid tech innovations. According to estimates, this sector could grow at a compound annual growth rate (CAGR) somewhere between 4 and 6 percent over the next few years. And, honestly, India’s economy is expected to grow at about 6.3 percent by fiscal year 2026, backed by ongoing investments in key sectors like steel and cement, which are crucial for infrastructure projects.
The Indian CV market is quite diverse, with several segments each showing their own unique growth patterns that tie back to broader economic and industrial trends. Heavy Commercial Vehicles (HCVs), for instance, saw a dip of around 9 percent in FY25—mainly because of high inventory levels and a slowdown in mining activity—yet there's a good chance they’ll bounce back strongly. Freight movement alone is projected to grow at roughly 6 percent CAGR, which bodes well for HCV sales, expected to rise by about 4 percent in FY26. Major infrastructure projects like the Golden Quadrilateral and expansion of national highways are key drivers here. The National Highways Authority of India (NHAI), for example, plans to tender contracts worth ₹3.4 lakh crore in FY26, and incentives are being provided to encourage the scrapping of outdated fleets. Interestingly enough, initiatives like Andhra Pradesh’s Green Hydrogen Hub, investing an impressive ₹1.85 lakh crore, highlight the industry’s shift towards alternative energy sources.
Moving on, Intermediate and Medium Commercial Vehicles (I&MCV)—especially the 18.5-ton trucks—are expected to grow in sync with rising e-commerce activity and increased rural transportation demands. This segment is forecasted to expand about 4 percent in FY26, driven largely by replacement demand created through various scrappage policies. Light Commercial Vehicles (LCVs) and Small Commercial Vehicles (SCVs), though, seem to be heading in different directions; while SCVs face stagnation, LCVs are predicted to grow by approximately 4 percent, fueled by the boom in e-commerce deliveries in Tier 2 and Tier 3 cities. The electric three-wheeler market, specifically those under 2-ton GVW, is also gaining momentum, promising lower total ownership costs and better environmental sustainability.
The passenger bus segment, quite surprisingly perhaps, looks pretty healthy—sales are expected to increase by around 8 percent in FY26, marking the third year in a row of positive growth. Government initiatives like the PM E-Drive scheme, which has allocated nearly ₹44 billion for the purchase of 14,028 electric buses in FY26, are crucial in driving electrification efforts in public transport fleets. This shift is supported not only by environmental policies but also by better payment security and improved operational efficiencies within State Transport Undertakings (STUs), all aligned with India’s net-zero emission goals.
Regulations are also playing a vital role in this transformative phase for the industry. Upcoming standards like the Phase III Corporate Average Fuel Efficiency (CAFE) norms, expected to come into effect by 2027, and the Euro 7 emission standards, highlight India’s push for cleaner, safer, more efficient vehicles. Extended Producer Responsibility (EPR) policies, which focus on vehicle recycling, are set to promote scrappage, along with new safety regulations requiring advanced driver assistance systems (ADAS) such as Forward Collision Warning, Electronic Stability Control, and Autonomous Emergency Braking. There’s even a plan to limit truck drivers’ hours to just eight per day, all aimed at improving safety—which makes sense, right? Additionally, the government is working on establishing over 1,000 rest stations across the country.
Customer behavior is another big factor influencing upcoming industry trends. There’s a noticeable shift towards solutions that boost efficiency, connectivity, and safety. Predictive maintenance platforms powered by AI, like Force Motors’ iPulse, are becoming quite common, helping reduce vehicle downtime and optimize fuel use. The boom in e-commerce has had a clear impact too—by FY21, reports indicated that e-commerce made up between 7 and 10 percent of Tata Motors’ CV sales and about 25 percent of Ashok Leyland’s urban CV sales. Leasing options and direct-to-customer sales models are gaining popularity too, especially for electric commercial fleets, thanks in part to OEMs like Mahindra Electric and financial service players such as Revfin. Digital tools are also transforming after-sales services—they’re deploying remote diagnostics and round-the-clock support centers, which significantly boost fleet uptime and improve ownership experiences.
Technology is truly disrupting this evolving landscape. Indian manufacturers are embracing AI, telematics, and connected vehicle platforms more aggressively than ever, transforming fleets into data-rich entities. For example, Ashok Leyland’s fleet reportedly produces over three million data points every hour, enabling real-time insights for better operations. Tata Motors is also working on India’s first hydrogen internal combustion engine truck—which shows efforts to diversify powertrain options beyond just electric and hybrid solutions. Startups like Taabi Mobility are using AI to optimize routes and reduce idle time, which helps cut fuel costs and emissions. And the rise of software-defined vehicles (SDVs) is promising to take operational intelligence and diagnostics to a whole new level, revolutionizing how fleet management is done.
On the infrastructure front, government-led expansion projects are critical to reshaping logistics and transportation networks. Initiatives such as Dedicated Freight Corridors (DFCs), Multi-Modal Logistics Parks (MMLPs), and the Gati Shakti scheme aim to more than double India’s rail freight capacity by 2030, making rail a more prominent mode of transport. This shift is expected to boost demand for last-mile delivery vehicles—mostly LCVs, MCVs, and SCVs—although it might slightly reduce some growth in HCVs. The government’s broader plan includes developing eleven industrial corridors and two defense corridors, with hubs focused on manufacturing sectors like pharmaceuticals, medical equipment, fishing, and ports—all of which will generate more cargo movement and demand for commercial vehicles.
A particularly encouraging development is the gradual but accelerating move towards alternative fuels. While electric vehicles dominate in urban passenger and short-haul segments, hydrogen and hybrid options look increasingly feasible for heavy-duty, long-distance freight applications. Industry projections suggest e-truck demand might reach around 7,750 units by 2030. This is supported by programs such as NITI Aayog’s e-FAST initiative, and major logistics players like the Jawaharlal Nehru Port Authority, which plans to deploy over 6,500 e-trucks over the next three to five years. Building the necessary charging infrastructure—aiming for about 1,500 fast-charge stations powered by renewable energy—is essential for maintaining this growth trajectory.
From a valuation standpoint, the outlook remains quite positive. Reports estimate that the Indian CV market, which was valued at roughly USD 51.27 billion in 2024, could climb to approximately USD 69.06 billion by 2030. That’s about a 5.14 percent CAGR. And if you look at the overall auto industry—covering passenger cars and CVs—the growth rate is expected to be around 5.7 percent, driven by a rising middle class, government policies, and increasing urbanization—factors that will likely fuel demand for manufacturing, supply chain services, and after-sales support.
All things considered, India’s commercial vehicle industry seems to be on the cusp of some pretty significant transformation. It’s being shaped by consistent macroeconomic growth, forward-thinking policies, changing customer expectations, and cutting-edge technological progress. Those companies that can skillfully navigate the regulatory landscape, adopt disruptive technologies early on, and respond to shifting market demands will have a real shot at leading India’s CV market in the years ahead. With infrastructure development and a move toward alternative powertrains reshaping logistics, this industry should unlock a host of new possibilities across all segments over the coming decade. Honestly, it’s quite an exciting time for the sector!
Source: Noah Wire Services
