The Indian two-wheeler market is anticipated to perform well in the current fiscal year. Sales growth could reach 9 percent. The rating firm ICRA forecasts a 9 percent growth for the Indian two-wheeler segment during this fiscal year compared to the previous year. This projection is based on various factors highlighted in the report, including increased replacement demand, rising consumption in urban areas, and improved rural income due to normal monsoon patterns, all contributing substantially to growth.
Prime Minister Narendra Modi has indicated that the government is working on simplifying the GST system. A possible outcome of this is a GST reduction on small passenger vehicles and two-wheelers, potentially before the festive season. This GST cut is poised to provide a significant boost to the two-wheeler industry, especially as the upcoming festive season is traditionally the most lucrative period for auto companies. The reduction is expected to boost both sales and overall demand.
The ICRA report also states that the outlook for fiscal year 2026 (FY2026) is positive. This is because of factors that are anticipated to increase demand, along with the potential for reduced GST rates, which could further stimulate market growth. In July 2025, the wholesale sales of two-wheelers in India increased by 9%, reaching 15 lakh units. Original Equipment Manufacturers (OEMs) ensured robust supply ahead of the festive season. However, retail sales experienced a 6.5% year-on-year decline in July, influenced by weak demand in urban areas and a decrease in rural buyers due to heavy rainfall. The rating agency anticipates a substantial improvement in retail demand during the upcoming festive period.
ICRA also highlighted a 32% increase in two-wheeler exports in July 2025, providing strong support to the industry. Meanwhile, sales of electric two-wheelers experienced a slight dip, falling to 1,02,900 units in July, representing a decrease of approximately 2%. Despite this, ICRA notes that electric two-wheelers have maintained a stable market share of 6-7% within the overall domestic two-wheeler market.