Indian CV industry’s alternate fuel penetration to reach 40-45% by FY30: ICRA

Rating agency ICRA in its latest report has said that penetration of alternate fuels, including CNG/LNG and electric vehicles (EV), in the Indian commercial vehicle (CV) industry is expected to increase to 40-45% by FY30 from 27% in FY26. It said CNG/LNG penetration in the CV segment is projected to reach 30-35% by FY30, while EV penetration is likely to rise to 10-15%. The growth in EV adoption is expected to be driven primarily by the medium and heavy commercial vehicle (M&HCV) bus segment.

According to the report, CNG/LNG has emerged as a key alternative fuel, with its share in the CV industry rising to 25% in FY26 from 7% in FY21. On the other hand, diesel's share declined to 67% from 86% during the same period, supported by stricter emission norms, regulatory initiatives, and declining total cost of ownership (TCO) of alternative fuel technologies (CNG, LNG and EV), driven by regulatory support.

Petrol continues to have a limited presence in the CV market, accounting for less than 10% of sales in FY26 and remaining largely confined to the light commercial vehicle (LCV) segment. ICRA added that incentives under the PM E-Drive Scheme have significantly lowered procurement costs, which is expected to accelerate the adoption of electric trucks in the coming years.

ICRA further stated that the adoption of electric and hybrid commercial vehicles, though modest at 2% in FY26, is expected to accelerate over the medium term. The growth will be supported by government initiatives, including incentives, subsidies and tax benefits, along with the gradual development of the EV ecosystem, which is expected to improve affordability and drive wider adoption.