GST Rate Cuts Fuel Commercial Vehicle Demand In January 2026 

India’s commercial vehicle (CV) industry saw a significant boost in January 2026, with wholesale volumes rising 27 per cent year-on-year (YoY) to 99,544 units, according to a recent ICRA report. This growth also marks a modest sequential increase of 1.9 per cent over December 2025, when 97,682 units were recorded. Analysts attribute this surge to the reduction in the Goods and Services Tax (GST) from 28 per cent to 18 per cent effective September 22, 2025, alongside increased freight activity across goods transportation.

Medium And Heavy Commercial Vehicle Segment Shows Strong Momentum

Retail sales in the medium and heavy commercial vehicle (M&HCV) segment grew 15.4 per cent YoY in January, with sequential growth of 22.1 per cent over December 2025. Over the first ten months of FY26, M&HCV retail volumes recorded a 6.3 per cent growth, highlighting steady demand recovery following the GST rate cuts. Analysts note that the segment’s growth reflects rising industrial activity and the need for reliable freight solutions across domestic logistics networks.

Light Commercial Vehicles Drive Last-Mile Transport

The light commercial vehicle (LCV) segment also experienced notable growth, with retail volumes rising 14.9 per cent YoY in January. Over ten months of FY26, the LCV segment recorded an 11.1 per cent increase in retail volumes. The segment continues to benefit from lower GST rates, which have made LCVs more cost-effective for businesses, coupled with higher demand for last-mile delivery and small cargo transportation.

Domestic CV Industry Outlook For FY26 And Beyond

During the first ten months of FY26, overall domestic CV wholesale volumes grew 11.3 per cent YoY, while retail volumes increased 8.5 per cent. Looking ahead, the industry is expected to maintain moderate growth, with wholesale volumes projected to rise 7–9 per cent in FY26. Analysts forecast M&HCVs to grow 7–9 per cent, LCVs 9–11 per cent, and buses 8–10 per cent. The GST rate reductions, combined with rising freight activity and ongoing infrastructure development, are supporting the sector’s positive momentum.

Freight Activity And Policy Support Drive Growth

The January sales surge underscores the impact of policy measures on commercial vehicle demand. With logistics and transport sectors expanding rapidly, businesses are upgrading fleets to meet growing requirements efficiently. Lower GST rates have reduced upfront costs, while rising freight volumes across the country have fueled demand for medium, heavy, and light commercial vehicles alike.

Overall, January 2026 reflects a strengthening CV market in India, with continued growth expected through FY26 and into FY27 as freight activity, policy incentives, and operational demand sustain momentum in the sector.