Indian CV Industry to Reach 45% Alternative Fuel Share by FY2030: ICRA

Alternative fuel powertrains, including CNG, LNG, and electric vehicles, are projected to reach a 40% to 45% penetration rate in the Indian commercial vehicle industry by FY2030, up from 27% in FY2026, according to credit rating agency ICRA. Adoption levels are expected to be higher in light commercial vehicles at 50% to 55%, compared to medium and heavy commercial vehicles at 25% to 30% by FY2030.

By 2029-30, ICRA expects CNG and LNG penetration across commercial vehicles to increase to 30% to 35%, while electric vehicle adoption is projected to reach 10% to 15%, led primarily by buses in the M&HCV category. Penetration of CNG and LNG grew from 7% in 2020-21 to 25% in 2025-26, while EV and hybrid penetration stood at 2% in 2025-26. Over the same period, diesel share in the Indian commercial vehicle market declined from 86% in 2020-21 to 67% in 2025-26, driven by stricter emission control norms and improving total cost of ownership metrics for alternative fuels. Petrol adoption remained under 10% in 2025-26, limited mostly to light commercial vehicles.

Operating economics remain a primary factor for fleet operators evaluating alternative fuel technologies. Kinjal Shah, Senior Vice President and Co-Group Head at ICRA, noted that while high upfront costs and infrastructure gaps remain challenges, total cost of ownership for 11 to 12-tonne gross vehicle weight electric trucks is generally 15% to 25% lower than diesel or CNG counterparts. In the 55-tonne category, total cost of ownership for electric trucks is 10% to 15% lower than diesel, but 15% to 20% higher than LNG trucks. Shah added that procurement incentives under the PM E-Drive Scheme have reduced initial purchase costs and helped accelerate electric truck adoption.

ICRA says domestic OEMs are expanding research and development investments across multiple fuel platforms and implementing modular vehicle architectures to standardize core components across interchangeable fuel systems. Manufacturers are also developing domestic vendor ecosystems for battery management systems, motors, fuel tanks, and engine peripherals to manage production costs and supply chain risks.

Shah highlighted that while the industry's volumetric growth is expected to remain steady during the transition, incremental volume increases will be increasingly dominated by alternative fuels, requiring ongoing investments that could impact OEM profitability and credit profiles.