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Historical & Industrial development Although India has a well-developed rail network and a reasonably good water transport network, road transport still accounts for a major share in the overall movement of goods and people. As of FY96, the country had an estimated road network of 2.88mn kilometers, of which only about 1.4mn kilometers were surfaced. The national highway network accounted for 34,100kilometers. The road transport has improved its share in the total goods traffic expressed in total ton-km from just 12% in FY51 to 62.5% in FY98. In passenger traffic, its share has improved from 26% of total passenger traffic in passenger-km in FY1951 to 85% in FY98. By 2000, the share of road transport in goods traffic is projected to increase to 65% and passenger traffic to 87%. The Indian commercial vehicles (CV) industry has a long history, possibly dating back to the passenger vehicles industry. Telco, the first entrant in the segment, continues to be the largest till date, with a market reach unrivalled by its competitors. Telco pioneered production of commercial vehicles in the country with technical collaboration with Daimler-Benz of Germany in 1954. The industry has made a significant contribution to the country’s industrialization and progress. In fact, India achieved self-sufficiency in commercial vehicles, except in the high-tonnage classes, where the demand has nonetheless been limited. The entry of Ashok Leyland, with technology from British Leyland, marked the beginning of competition in the truck and bus segment. The substantial rise in petrol prices in 1976 lead to conversion of almost all CV to diesel engines. The continuous increase in petrol prices since then and the subsidy provided to diesel increased flavor for diesel commercial vehicles continued till date. The next major change in the industry came about in late eighties, when the superior Japanese Light Commercial Vehicles (LCV) made their debut in India. The Japanese invasion, however, fizzled out very soon as the new entrants ran into losses as a result of the rising yen. This brought to the fore the critical role of indigenisation as a means of ensuring steady growth and survival during difficult times. However, Telco was the biggest beneficiary of the fiasco. Telco soon upgraded its products to match the Japanese in style and finish, nonetheless with much the same aggregates, with the result that it emerged as the main contender by cornering more than 50% of the LCV market. The marginal players in the commercial vehicle industry like Hindustan Motors, Premier Automobiles Ltd and Standard Motors Pvt Ltd withdrew from LCV market in late eighties due to stiff competition in passenger car market and their inability to compete in the CV market. Prior to 1985, CVs were available only in two categories i.e. 2 ton and 8 ton and above. The second-hand down rated vehicles were used to transport low weight for short distance. But with the entry of Japanese players fuel efficient vehicles filled the gap between 2 and 8 ton. The commercial vehicle (HCV and LCV combined) sales have increased from 68,392 in 1980 to 141,098 in 1990 at a CAGR of 7.5%. The industry witnessed a drop in sales in 1986 because of economy slowdown. The commercial vehicle sales witnessed a drop in 1991 and 1992 as a result of severe credit crunch and recession in the economy. But with the revival in economy it zoomed back in 1993 and witnessed an above average growth till 1997. The slow down in demand was again seen, in FY98 and FY99, later followed by a robust growth in FY2000. The earthquake in Gujarat, followed by drought like conditions persistent in Rajasthan and Madhya Pradesh etc. and the mounting fiscal deficit lead to decline in the overall demand in FY2001. Other sector reports Previous chapter Next chapter

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