"The Rs 70,000-crore infrastructure push during the Union Budget 2015-16 and passage of the legislation that opened the doors to commercial mining would boost demand for CV in the short-term. Furthermore, lower fuel costs and reduced interest rates would assist demand for CV in FY16," the credit rating agency report said.
However, it noted that sustainable recovery of CV industry would depend on successful implementation of initiatives such as Make In India, Goods and Services Tax (GST) and Smart City, combined with ease of doing business.
According to the report, increasing usage of hub and spoke model would create demand for more light commercial vehicles goods carrier (LCVGC) to effectively redistribute freight from the nodal points to users.
Since the launch of Make in India campaign in September last year, the foreign direct investment (FDI) during October to February has surged by 56 per cent, the report said.
With the revival in commercial vehicle demand, the agency expects income and profitability of manufacturers to improve.
"In the-short term, the income of CV manufacturers is likely to improve owing to revival in CV demand," it said.
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