GST Cut Boosts CV Industry: Ashok Leyland’s Shenu Agarwal

The Indian commercial vehicle (CV) industry is likely to be the biggest winner after the government’s recent move to cut GST on commercial vehicles from 28% to 18%. According to Shenu Agarwal, Managing Director of Ashok Leyland, this tax cut could change the game for truck and bus sales in India.

Trucks Ready for Replacement

India’s trucks are getting old. On average, a truck on the road today is 10 years old, while earlier the normal age was 7–8 years. Around 11–12 lakh medium and heavy trucks are more than 10 years old and due for replacement.

“This GST cut, which lowers prices by almost 10%, gives transporters a strong reason to buy new vehicles. Many people who were delaying purchases will now go ahead,” Agarwal said.

If replacement demand starts rising, India’s CV sales could even cross the 2019 peak levels this year.

Why GST Cut Helps the Economy Too

Agarwal explained that the GST cut is not only about reducing truck prices. It will also help the overall economy. “GST impacts every business and every consumer. If people buy more goods, freight demand will increase. More freight means more trucks are needed,” he said.

With demand for goods transport expected to rise in areas like mining, road building, and infrastructure projects, the CV sector is set for growth.

Relief to Small Operators and Buyers of LCVs                  

The change will assist small fleet operators, who constitute nearly 60% of the market. Such operators struggle to purchase new trucks due to the costs involved. However, under the new system, as costs of trucks drops and loans become more affordable, operators will find it easier to upgrade.

The light commercial vehicle (LCV) segment, which has been under stress, will also benefit from this cut. Even banks and financiers are more confident because the reduced cost of vehicles lowers their lending risk.

Bus Demand Rising Fast

The bus market is also growing quickly. Both state transport departments and private players are buying more buses to meet rising passenger demand. To meet this need, Ashok Leyland is planning to increase its bus production capacity to 1,650 buses per month by April 2026.

Industry Moves with Caution

Even though the outlook is positive, Agarwal noted that the CV market doesn’t move on emotions like the car market. Trucks cost between ₹30–50 lakh, so operators make careful, revenue-based decisions. He said clearer buying trends will be visible only by October–November.

Outlook for 2025

Despite this caution, Agarwal is optimistic. Strong freight demand, government support, and the GST cut could finally give the CV industry the push it was waiting for. 

“If all goes well, this year’s sales could finally beat 2019 levels,” he said.

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