ICRA also expects that the fund allocation towards scrappage of old government vehicles and extension of interest-free loans to state governments for the same would spur replacement demand, especially for buses.

With green mobility identified as one of the priority areas, manufacturing, and adoption of alternate fuel vehicles, including electric vehicles, has also received an impetus.

Shamsher Dewan, Senior Vice President & Group Head - Corporate Ratings, ICRA Limited, stated, "The significantly higher allocation of Rs. 10 lakh crore towards capital investments and Rs. 79,000 crore towards affordable housing in the Union Budget of 2023-24 augurs well for commercial vehicle demand, especially the heavier multi-axle vehicles and tippers. The LCV segment would also benefit from the outlay of Rs. 75,000 crore towards improving first and last-mile connectivity for select sectors.

ICRA also expects that the fund allocation towards scrappage of old government vehicles and extension of interest-free loans to state governments for the same would spur replacement demand, especially for buses. With green mobility identified as one of the priority areas, manufacturing, and adoption of alternate fuel vehicles, including electric vehicles, has also received an impetus.