While commercial vehicle growth in the country is subdued due to a combination of factors ICRA believes that CV exports from India are likely to grow at a CAGR of 12-15 per cent over the medium-term to touch sales of 160,000 units by FY 2020.
CV exports from India grew by 7 per cent in 11m FY 2017 aided by expanding market coverage and healthy demand from some of the key export markets.
This is despite the fact that demand from important market like Sri lanka was impacted by restriction on financing norms for automobiles and hike in import duties.
Growth will be driven by a combination of expanding market coverage by Indian OEMs in new markets (i.e. ASEAN, Africa and Middle East), scale-up in exports from foreign CV OEMs and growing demand from some of the existingmarkets in the SAARC region.
In order to compete more effectively with foreign OEMs, domestic players have also renewedtheir plans of setting up assembly operations in multiple markets, a strategy which had taken a back seat in the past few years.
Moreover, macro-economic challenges and currency devaluation in select African markets also dampened demand.While there have been near-term challenges, CV OEMs are gearing up for the long-haul and are gradually looking at expandingtheir market coverage in Asian, African and Middle Eastern countries.
Historically, Indian OEMs have maintained strong hold innear-by markets of Sri lanka, Bangladesh and Nepal but they have increased their focus on Middle East and African countries aswell over the past few years. In addition, new product line-up and technology upgradation are now allow them to enter relatively advance markets of South-East Asia.