India’s commercial vehicle (CV) industry is poised to enter its strongest growth phase in years, with sales expected to hit new highs in FY26 and FY27, driven largely by a surge in replacement demand following tax rationalisation, according to the country’s leading CV manufacturers.
Considered a key barometer of economic activity, CV sales are projected to surpass the pre-pandemic record of 1.07 million units achieved in FY19 during the current financial year. “Year-to-date till December 2025, the CV industry has witnessed strong growth, supported by sustained infrastructure development and GST rationalisation. If the current momentum continues, FY26 and FY27 could be the best years yet for the industry,” said Shenu Agarwal, Managing Director and CEO, Ashok Leyland.
The upswing follows the government’s decision to reduce GST on most commercial vehicles—including trucks, pick-ups, buses and three-wheelers—to 18% from 28%, effective September 22, 2025. As a result, CV sales rose 21.5% year-on-year to 290,085 units in the October–December quarter, according to data from the Society of Indian Automobile Manufacturers (SIAM). For the April–December period, industry volumes increased 10% year-on-year to 754,067 units.
While growth in the first half of the fiscal was relatively muted at 3.9%, momentum strengthened in the second half, aided by higher fleet utilisation, a pickup in construction and mining activity post-monsoons, and increased government spending on infrastructure.
“There has been a significant uptick in volumes in the last quarter,” said Girish Wagh, Managing Director and CEO, Tata Motors. “The strongest growth has come from intermediate, light and medium commercial vehicles, followed by small commercial vehicles and heavy-duty trucks. We expect this momentum to carry into the next financial year.”
Industry executives attribute much of the demand revival to fleet replacement, as the average age of India’s CV fleet has climbed to a record 11 years, well above the historical norm of 7–8 years. Agarwal estimates that around 4.8 million commercial vehicles aged 10–15 years are currently operating on Indian roads, including 1.9 million medium and heavy commercial vehicles (MHCVs) and 2.9 million light commercial vehicles (LCVs).
Wagh noted that freight demand has been growing at 5–6% annually in billion tonne-kilometre (BTKM) terms, reflecting rising logistics activity and a shift towards larger, multi-axle trucks. “Relaxation of axle-load norms increased carrying capacity over the last few years, but volumes remained largely flat. Going forward, as economic activity and GDP growth accelerate, we expect a clear increase in volume demand,” he said.
Demand for transportation across key sectors—including automobiles, auto components, steel, cement and e-commerce—has shown a healthy uptick in recent months. India’s economy is projected to grow 7.4% in FY26, according to the first advance estimates released by the National Statistics Office (NSO), compared with 6.5% growth in FY25.
Tata Motors and Ashok Leyland together dominate the Indian CV market, accounting for around 53% of total industry volumes. However, industry veterans caution that the CV sector has historically followed a cyclical pattern. “Typically, two years of strong growth are followed by three years of sluggish demand in the commercial vehicle industry,” said a senior industry executive.
Even so, with policy support, replacement-led demand and infrastructure-led economic growth converging, FY26 is shaping up to be a defining year for India’s commercial vehicle market.
