GST Reduction to Boost Two-Wheeler Sales, Potentially Leading to Record Numbers

The Indian two-wheeler market is poised for a positive year, with an expected growth of up to 9% in sales. ICRA’s analysis points to several key drivers, including robust replacement demand, urban market recovery, and the potential for increased rural income due to a normal monsoon. A key development is the government’s consideration of GST cuts on smaller vehicles, including two-wheelers. This initiative, possibly implemented before the festive season, is expected to provide a significant boost to the industry. This timing is particularly advantageous for auto manufacturers, as the festive season typically sees a surge in demand and sales. The potential GST reduction is expected to stimulate demand further. ICRA’s report projects a positive outlook for the fiscal year 2026 (FY2026), driven by factors that will boost demand and the potential for reduced GST rates.