India’s ageing truck fleet could escalate freight spends by 2–8%

Turns out, India's big trucks are getting pretty old! The average age is now ten years, the highest it's been in two decades. We expect a bump up in transportation costs, putting up short-term to mid-term pressure on costs and inflation, further impacting the consumption.

A fleet that got old, fast
India's Medium and Heavy Commercial Vehicle (M&HCV) fleet has significantly expanded from approximately 2 million vehicles in FY 2005 to 5.4 million currently. However, the rate of replacement hasn't kept pace with new acquisitions. Consequently, industry data from vehicle registrations indicates that the average age of a long-haul truck has increased from 8.0 years a decade prior to 10 years in FY 2024.

Several factors have contributed to this ageing trend. Operators postponed new purchases following the 2018 axle-load regulation change, which immediately increased legal payload capacity by 20%, and the substantial price increase associated with the BS-VI emission standards in 2020. Furthermore, the cash-flow difficulties experienced by many small fleet owners during the Covid-19 pandemic compelled them to extend the operational life of their existing vehicles instead of replacing them.

Scrappage policy becomes a real filter
The union government's Voluntary Vehicle-Fleet Modernisation Programme, effective from 1 October 2024, mandates automated fitness tests for all heavy commercial vehicles (HCVs) older than 15 years; non-compliant vehicles will be sent for scrapping.

According to consultancy ICRA, approximately 1.1 million trucks, constituting about one-fifth of the currently active fleet, are over 15 years old and thus considered high-risk in the coming three years.

While the scrappage policy includes incentives such as potential road tax waivers of up to 25% on replacement trucks by states and loyalty discounts of 4-6% from original equipment manufacturers (OEMs), fleet owners still face a significant upfront cost of ₹35–40 lakh for a new BS-VI tractor.

Cost pressures are stacking up

• Higher running costs: Field studies show a pre-BS-IV truck gulps 5-7% more diesel and needs nearly twice the maintenance spend per kilometre than a three-year-old unit.
• Regulated charges: Toll rates on national highways jumped another 4-5 % on 1 April 2025, the second hike in 12 months.
• Capital cost reset: Monthly EMIs for a BS VI truck are expected to be higher, the net cost escalations can translate to ~30-35%+ for a fleet owner on the fixed costs, making utilisation critical than ever.

Put together, logisticians calculate that the baseline cost/km for running a long-haul truck has climbed 6-8 % in the past year alone.

Freight rates: brace for a two-step climb

Short term (next 12 months)
With a wave of trucks heading for fitness tests and downtime rising on 10-year-old vehicles, capacity is expected to shrink by 1-2%. Spot freight on high-density lanes such as Delhi–Mumbai or Chennai–Bangalore could firm up 2-5%, according to estimates from large brokerages tracking the Toll road-freight index.

FY 2026–27 “replacement super-cycle”
If financiers loosen credit and OEM supply holds, the market could see a sharp replacement spike. During that window, carriers will attempt to pass higher EMIs and insurance onto shippers, pushing blended contract rates up another 5-8% before supply catches up.

Beyond 2028
A younger, more efficient fleet—plus higher permissible payloads—should expand “ton-kilometre” capacity enough to cap inflation, barring another diesel shock.

Winners and losers

What shippers should do now

1. Lock capacity early. Negotiate 12- to 18-month agreements with capacity/payload-linked clauses before the pre-buying rush.
2. Reward cleaner trucks. Tiered rate cards for BS-VI or LNG vehicles not only lower breakdown risk but also help corporate ESG targets. Map your entire network operation characteristics based on ageing specific to their supply chain network across primary, secondary, inbound and outbound movements.
3. Diversify modes. Shift non-time-critical cargo to rail or coastal shipping to buffer road-rate spikes. Explore multi-modal possibilities in the network.
4. Track utilisation in real time. Cutting empty runs by even 5 % offsets a chunk of the expected cost rise. The organisations must do systematic investments to make asset productivity a core problem statement in transportation. It is no longer a choice, it is not expected to hit bottom limes like never before.

The road ahead
India’s 10-year-old truck fleet is both a liability and an opportunity. It threatens near-term freight inflation just as the economy eyes a manufacturing-led upswing. Yet it also promises the commercial vehicle industry its biggest replacement cycle in a generation—one that could put cleaner, more connected trucks on the nation’s highways by the decade’s end. Whether shippers pay a painful premium in the interim will depend on how quickly financiers, policy-makers and OEMs can help fleets trade grey metal for green.