India Commercial Vehicles Market SIZE & SHARE ANALYSIS - GROWTH TRENDS & FORECASTS UP TO 2029

India Commercial Vehicles Market Analysis

The India Commercial Vehicles Market size is estimated at 51.09 billion USD in 2025, and is expected to reach 62.95 billion USD by 2029, growing at a CAGR of 5.36% during the forecast period (2025-2029).

The Indian commercial vehicle industry is experiencing a transformative phase driven by rapid urbanization and evolving transportation needs. The industry's landscape is being reshaped by stringent emission norms, particularly the BS-VI standards, which have catalyzed technological advancements in vehicle manufacturing. These regulations have prompted manufacturers to invest heavily in research and development, leading to the emergence of more efficient and environmentally conscious vehicle designs. The sector's evolution is further accelerated by the government's push towards sustainable transportation solutions, with several states implementing policies to phase out older commercial vehicles and promote cleaner alternatives.

The commercial vehicle market in India is witnessing significant technological integration across vehicle categories, with manufacturers incorporating advanced telematics and IoT solutions. Major players like Tata Motors and Ashok Leyland are leading this transformation by introducing connected vehicle technologies that enhance fleet management capabilities and operational efficiency. In a notable development from 2023, Tata Motors secured a significant contract to supply 1,400 school buses to the United Arab Emirates, demonstrating the growing international recognition of Indian commercial vehicle manufacturing capabilities. This technological evolution is particularly evident in the urban transportation segment, where smart fleet management systems are becoming increasingly prevalent.

The industry is experiencing a notable shift in manufacturing approaches, with a growing emphasis on modular vehicle platforms and flexible production systems. This transformation is evident in the emergence of new manufacturing facilities equipped with Industry 4.0 capabilities, enabling greater customization and efficiency in commercial vehicle production in India. The sector has also witnessed significant developments in alternative fuel technologies, with manufacturers expanding their portfolio to include CNG, LNG, and electric variants. The introduction of new vehicle models with alternative fuel options has been particularly notable in the last-mile delivery segment, where the demand for sustainable transportation solutions continues to grow.

The commercial vehicle market is increasingly aligning with India's broader economic objectives, particularly in supporting the logistics and infrastructure sectors. The industry's focus has shifted towards developing specialized vehicles for specific applications, from construction and mining to refrigerated transportation and urban mobility. This specialization is reflected in the recent product launches by major manufacturers, who are introducing application-specific variants to meet diverse market needs. The sector has also witnessed increased collaboration between domestic and international players, leading to technology transfer and enhanced product offerings. These partnerships are particularly focused on developing next-generation commercial automobiles that combine global technology with local market requirements.

India Commercial Vehicles Market Trends

Government initiatives and stringent norms drive rapid growth in the electric vehicle market in India

• India's electric vehicle (EV) market is in a growth phase, with the government actively formulating strategies to combat pollution. The Fame India scheme, launched in 2015, has played a pivotal role in driving vehicle electrification. Building on its success, Fame Phase 2, active till April 2022, further bolstered EV sales, especially in 2021, with the government offering subsidies like INR 10,000 grants for electric cars with battery capacities up to 15 kWh.
• State governments across India are increasingly incorporating electric buses into their fleets, aiming to transition from internal combustion engine (ICE) buses. This move not only cuts operational costs but also curbs carbon emissions and improves air quality. In a notable move, the Delhi government greenlit the procurement of 300 new low-floor electric (AC) buses in March 2021, with 100 of them hitting the roads in January 2022. These initiatives contributed to a significant 62.58% surge in demand for electric commercial vehicles in India in 2022 over 2021.
• The demand for electric cars has surged in recent times, driven by the government's introduction of stringent norms. In August 2021, the Indian government unveiled the Vehicle Scrappage Policy, targeting the phasing out of polluting and unfit vehicles, irrespective of their age. This policy, set to be implemented by 2024, is steering consumers toward electric cars. Additionally, the government has set an ambitious target of having 30% of all cars in India electrified by 2030. These initiatives are poised to propel electric car sales during the 2024-2030 period in India.

OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT

• India's population, driven by factors like a young demographic and improved healthcare, is projected to reach 1,522.77 million by 2030, reflecting steady growth
• India's GDP per capita is expected to sustain growth, reaching USD 4,205.47 by 2030
• The consumer spending for vehicle purchases in Asia-Pacific, as exemplified by India, shows signs of cautious optimism during 2022-2023, following a period of volatility
• India's journey toward lower inflation sets the stage for economic resilience and investor confidence
• India's auto interest rates have shown a consistent downward trend, driven by RBI's measures and evolving lending practices
• India's electric vehicle charging station market surges with 6,800 slow charging and 4,100 fast charging stations in 2022
• Electric vehicle sales in India increased because of the falling battery prices and government incentives
• Various new entries and new product launches may accelerate the battery pack market in India
• The Indian vehicle market shows resilience with a strong recovery in consumer spending and vehicle purchases
• The numerous tax hikes in the country were expected to increase fuel prices in 2023
• From 2022 to 2023, Mahindra & Mahindra and Tata Motors led India's commercial vehicles sector, with Isuzu showing significant growth; Force Motors and Eicher Motors face challenges due to recent declines

Segment Analysis: Vehicle Body Type

Light Commercial Pick-up Trucks Segment in India Commercial Vehicles Market

Light Commercial Pick-up Trucks dominate the Indian commercial vehicles market, commanding approximately 57% commercial vehicle market share in 2024. This segment's leadership position is driven by their versatility in handling last-mile delivery requirements, particularly with the surge in e-commerce activities. The segment's strong performance is further bolstered by increasing demands from the logistics sector, SMEs, and rural transportation needs. These vehicles offer an optimal balance of payload capacity and maneuverability, making them particularly suitable for both urban and rural applications. The shift toward electric and CNG variants in this segment, coupled with innovative financing options and competitive total cost of ownership, has further strengthened its market position.

Buses Segment in India Commercial Vehicles Market

The Buses segment is emerging as the fastest-growing category in India's commercial vehicle segment, with a projected growth rate of approximately 8% during 2024-2029. This remarkable growth trajectory is primarily driven by government initiatives to modernize public transportation systems and the increasing demand for electric buses in urban areas. The segment's expansion is further supported by rising requirements from the education sector, corporate employee transportation, and intercity travel operators. Manufacturers are focusing on introducing advanced features, improved fuel efficiency, and electric variants to meet evolving market demands. The implementation of smart city projects and the push for sustainable urban mobility solutions are expected to maintain this growth momentum.

Remaining Segments in Vehicle Body Type

The Heavy-duty Commercial Trucks and Light Commercial Vans segments continue to play crucial roles in shaping the Indian commercial vehicles market. Heavy commercial vehicles serve as the backbone of long-haul transportation and infrastructure development projects, while Light Commercial Vans cater to urban logistics and specialized transportation needs. These segments are witnessing significant technological advancements, particularly in terms of fuel efficiency, safety features, and telematics integration. The transition toward alternative fuel vehicles and the introduction of value-added services are reshaping these segments, while increasing focus on total cost of ownership and operational efficiency continues to drive innovation and market development.

Segment Analysis: Propulsion Type

ICE Segment in India Commercial Vehicles Market

The Internal Combustion Engine (ICE) segment continues to dominate the Indian commercial vehicle segment, commanding approximately 99% market share in 2024. This overwhelming dominance is primarily attributed to the well-established infrastructure supporting conventional fuel vehicles, lower upfront costs compared to alternative powertrains, and the proven reliability of ICE technology in commercial applications. The segment's strength is particularly evident in heavy-duty applications where diesel engines remain the preferred choice due to their superior torque output and fuel efficiency for long-haul transportation. The extensive network of fuel stations, service centers, and spare parts availability across India further reinforces the ICE segment's market leadership, making it the go-to choice for fleet operators and transport companies.

Hybrid & Electric Segment in India Commercial Vehicles Market

The Hybrid & Electric segment in India's commercial vehicles market is experiencing remarkable growth momentum, driven by increasing environmental consciousness and supportive government policies. This segment is witnessing rapid expansion through 2024-2029, supported by significant technological advancements in battery technology and charging infrastructure development. The growth is further catalyzed by the government's push towards electrification through initiatives like FAME II and various state-level incentives for electric commercial vehicles. Major automotive manufacturers are increasingly investing in electric and hybrid technology, introducing new models across various commercial vehicle categories. The segment's growth is particularly notable in urban logistics and public transportation sectors, where the benefits of lower operating costs and reduced emissions are most apparent.