India's commercial vehicle industry is set to reach a record 1.24 million units in fiscal year 2027, surpassing the previous peak of 1.2 million units in FY19. According to Crisil Ratings, growth is expected to moderate to 5-6% following a robust 13% rebound in FY26, driven by a combination of factors including a GST rate cut from 28% to 18% in September 2025, easing interest rates, and increased infrastructure and mining activity.

Domestic demand is anticipated to remain strong in FY27, supported by ongoing infrastructure projects and steady replacement demand. However, exports could face challenges due to the ongoing crisis in West Asia, which may delay shipments but not eliminate demand. Currently, about 92% of commercial vehicle sales are domestic, with light commercial vehicles (LCVs) making up 60% of the market.

The LCV segment is projected to grow at 5-6%, primarily driven by e-commerce and last-mile delivery needs. Medium and heavy commercial vehicles (MHCVs) are expected to see a 4-5% growth, bolstered by freight movement and infrastructure spending. The bus segment is also expected to grow by 3-4%, aided by government initiatives for electric buses.

Despite the anticipated moderation in growth and pressure on profit margins due to rising input costs, Crisil indicates that the industry's credit profile remains stable, supported by strong cash flows. Annual capital expenditure is projected at ₹5,500 crore (approximately $660 million USD) for modernization and compliance with new regulations.