Royal Enfield, the maker of Bullet motorcycles, is engaging with the government to pitch a common Goods and Services Tax (GST) rate of 18% on all motorcycles, according to the company’s chief executive officer.
As part of the GST 2.0 reforms, the tax rate on motorbikes up to 350cc was reduced to 18% from 28% earlier while that on motorcycles above 350cc was hiked to 40%.
“We have been engaging with government agencies to see whether we can have a one equal slab of 18% because it will certainly help in the 450cc and 650cc segments to get scale in India and thereby take the product to internation markets where there is potential,” said B Govindarajan, Managing Director of Eicher Motors, and Chief Executive Officer of Royal Enfield.
“In more than 350cc segment, as the GST rate has gone up, the offtake is slightly lower… If we don’t have scale, it puts pressure on this segment,” said Govindarajan.
If we don’t invest enough in R&D and not bring in products because of the GST rate of 40%, then Indian two-wheeler makers, the leaders outside India in the 450cc and 650cc segments, will lose the advantage of making in India. “Internationally there is a huge potential for 450cc and 650cc motorcycles,” said Govindarajan.
“If the government helps us in bringing an equal tax rate of 18%, the demand will be better, giving all of us (automakers) more room to invest and do R&D work and build products which we can take globally,” he added.
“If volumes come down, the focus will be on 350cc segment and below. We will miss out this opportunity for Indian two-wheeler industry,” he argued.
During the 33-day festive season, Royal Enfield’s sales grew by 50%. “Our bookings are continuing. We are confident that we will outgrow the market in the next half of the ongoing fiscal. Post the festive season,” he said, adding that the GST reforms have made motorcycles under 350cc more accessible.
Eicher Motors reported its strongest quarterly performance for the second quarter as revenue from operations surged 45% to ₹6,172 crore in the corresponding quarter of FY 2024-25 while EBITDA grew 39% to ₹1,512 crore and Profit After Tax rose 25% to ₹1,369 crore from ₹1,100 crore last year. Royal Enfield also recorded its highest-ever quarterly sales volume of 3,27,067 motorcycles, up 45% from 2,25,317 motorcycles sold during Q2 FY 2024-25.
“We witnessed an outstanding festive season, achieving record sales of 2.49 lakh units. The Government of India’s GST reform has further enhanced accessibility for motorcycles under 350cc, as reflected in the strong customer demand,” said Govindarajan.
Its commercial vehicle arm, VE Commercial Vehicles (VECV) reported revenues of ₹6,106 crores in Q2 FY26, up 10.3%. EBITDA for the second quarter rose 8.0% to ₹479 crores, from ₹395 crores a year ago. Profit after tax stood at ₹249 crores as against ₹208 crores last year. VECV recorded sales of 21,901 vehicles in the second quarter, up from 20,774 vehicles last year.
