The Indian two-wheeler market is expected to have a strong fiscal year, with sales potentially growing by 9 percent. ICRA, a rating firm, predicts a 9 percent growth for the Indian two-wheeler segment this fiscal year compared to last year. This forecast is based on several factors. According to the report, increasing replacement demand, a recovery in consumption in cities, and normal monsoon conditions leading to improved rural income are all expected to boost growth.
Prime Minister Narendra Modi has hinted that the central government is working on a simplified GST system, which could involve a reduction in GST on small passenger vehicles and two-wheelers. This decision might come before the festive season. This GST cut is expected to provide a significant boost to the two-wheeler industry, especially during the upcoming festive season, which is traditionally a peak sales period for auto companies. This reduction is expected to increase sales and overall demand.
ICRA’s report indicates a positive outlook for fiscal year 2026, driven by factors that are expected to boost demand, along with the potential for lower GST rates, which could further accelerate market growth. In July 2025, wholesale sales of two-wheelers in India increased by 9% to 15 lakh units. OEMs maintained good supply before the festivals. However, retail sales decreased by 6.5% year-on-year in July due to weaker demand in cities and fewer buyers in rural areas because of heavy rainfall. The rating agency expects retail demand to improve significantly during the festive season.
ICRA also noted a 32% increase in two-wheeler exports in July 2025, supporting the industry. Meanwhile, sales of electric two-wheelers saw a slight decline, dropping to 1,02,900 units in July, a decrease of approximately 2%. Despite this, ICRA notes that the share of electric two-wheelers has remained steady at 6-7% of the total domestic two-wheeler market.