GST Cut and Better Financing Can Reshape CV Industry: Ashok Leyland

Policy moves could reshape industry growth

India’s commercial vehicle (CV) industry may finally be heading toward a turnaround. Shenu Agarwal, managing director and chief executive of Ashok Leyland, believes two measures can change the game. A cut in Goods and Services Tax (GST) and easier access to credit.

Both moves, he says, would do more than lift market sentiment. They could spark a sharp revival in demand and reshape the growth path for FY26 and FY27.

At present, commercial vehicles attract a 28 percent GST rate. That is one of the steepest in the entire tax structure. A reduction to 18 percent would be nothing short of a landmark. It would cut acquisition costs for buyers. That means more consumption and more freight to move across the country.

Financing remains the critical link

Tax relief alone will not do the job. Financing plays a decisive role in this sector. Over 90 percent of CV purchases are loan-funded. Which is why all eyes are on potential Reserve Bank of India steps to improve credit flow.

If credit becomes easier, Agarwal believes demand will pick up almost instantly. The twin hurdles of high upfront costs and tight financing are holding back growth. Tackling both together could accelerate the industry’s recovery.

Ashok Leyland holds ground in a tough market

Even in a challenging quarter, Ashok Leyland managed to expand its market share. The company gained 1.3 percent in the medium and heavy commercial vehicle (MHCV) category, led by a 1.8 percent increase in trucks.

The bus segment, however, lost ground as demand tilted toward fully built vehicles. On the other hand, the defence business remains a strong pillar. Though revenues dipped year-on-year due to a large order executed last year, the order book is healthy at about Rs 1,000 crore. Agarwal expects 25–30 percent topline growth from defence this fiscal, supported by both repeat and fresh demand.

Conclusion

The CV industry is waiting for a push. A lower GST rate and easier financing could provide exactly that. Both would ease the burden on buyers, boost freight activity, and drive sales. The outlook looks brighter for Ashok Leyland with its strong presence in MHCVs, steady defence orders, and disciplined execution.

Disclaimer: This article is for informational purposes only. It should not be considered investment advice. Please do your own research or consult a professional before making any investment decisions.

• Stay updated with 91trucks for more articles and news.
• Subscribe to our YouTube channel.
• Follow us on Facebook, Instagram, and LinkedIn.