India’s commercial vehicle makers had a lacklustre year in 2024-25, with wholesales declining 1.2 per cent to around 9.57 lakh units, according to the Society of Indian Auto Manufacturers (SIAM). This financial year, aided by a pickup in government spending and support measures like the PM-eBus Sewa Scheme, the industry volumes are seen touching 1 million units.

If this is achieved, this will be the first time since 2018-19 that the truck and bus industry will have touched the 1 million units annual sales milestone.

According to credit ratings agency CRISIL, it will be the light commercial vehicle leading the way this year, powered by rising penetration of e-commerce and warehousing into smaller tier 2 and tier 3 markets. Separately, a pickup in freight-intensive sectors like cement and mining should also aid overall growth.

"Domestic CV volume should grow 3-5 per cent this fiscal, rebounding from last fiscal’s slowdown and aligning with the sector’s long-term growth trend. The recovery will be driven by a revival in infrastructure execution—an anchor for CV demand—which gained momentum in the last quarter of fiscal 2025 and is likely to sustain on the back of a 10-11 per cent rise in central government capex," said Anuj Sethi, senior director at CRISIL Ratings. 

LCVs, which account for 62 per cent of the total volume, are expected to grow 4-6 per cent this year, while the medium and heavy CVs, which account for 38 per cent of total volume, are likely to follow with a 2-4 per cent growth, CRISIL estimates. Replacement demand, accounting for a fifth of the volumes should also boost demand.

Separately, the electric bus market should get a boost from the PM-eBus Sewa Scheme, although the base is currently low at 3,200 units.

India’s trucking industry is set for a major regulatory change this year. All new trucks manufactured on or after October 1, 2025, will have to be equipped with air-conditioned (AC) cabins for drivers. This, says CRISIL, will increase costs by around ₹30,000, especially in the case of medium and heavy trucks. Manufacturers have already raised costs by around 2-3 per cent in January this year to offset the rise in compliance costs. 

The capital expenditure for regulatory upgrades and electric platform developments will likely rise by 12-15 per cent. 

"With regulatory costs rising, CV makers are likely to continue selective price hikes to protect margins at 11-12 per cent. Meanwhile, capex is set to rise, with leading players planning spends worth ₹4,500 crore this fiscal towards safety upgrades, emission compliance, and electric vehicle platforms," said Poonam Upadhyay, director at CRISIL Ratings.

But, strong balance sheets should keep debt levels low. At the same time, softening input costs are expected to support operating margin at around 11-12 per cent.