The Indian two-wheeler market is anticipated to have a favorable current fiscal year. Sales growth could reach as high as 9 percent. ICRA, a rating firm, projects a 9 percent growth in the Indian two-wheeler segment during this fiscal year compared to the previous year. This forecast is based on several key factors outlined in the report, including rising replacement demand, recovering consumption in urban areas, and improved rural income due to normal monsoon patterns, all contributing significantly to growth.
Prime Minister Narendra Modi has hinted at the central government’s efforts to simplify the GST system. This may involve a GST reduction on smaller passenger vehicles and two-wheelers, potentially ahead of 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 accelerate both sales and overall demand.
The ICRA report indicates a positive outlook for the fiscal year 2026 (FY2026). This is attributed to factors that are expected to boost demand, coupled with the potential for further reductions in GST rates, which could further stimulate market growth. In July 2025, the wholesale sales of two-wheelers in India saw a 9% increase, 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.