GST Reduction To Drive Record Vehicle Sales Across Cities And Villages In India

Auto News: The current financial year is going to be good for the Indian two-wheeler market. This time there can be a growth of up to 9 percent in sales. According to rating firm ICRA, during this fiscal year, the Indian two-wheeler segment can grow up to 9 percent compared to last year. The firm has expressed this expectation on the basis of many facts.

According to the report, the ever-increasing replacement demand, recovery of consumption in cities, and improvement in rural income due to normal monsoon are the reasons that will play an important role in growth.

Modi Hints At GST Simplification

Prime Minister Narendra Modi has indicated that the central government is working on a simpler GST system. Under this, GST on small passenger vehicles and two-wheelers can be reduced. This decision can be taken before the festive season. This GST reduction will give an additional boost to the two-wheeler industry. Also, the upcoming festive season is considered to be the most profitable time for auto companies. This will help in boosting sales and demand.

Demand will increase due to GST reduction

According to the ICRA report, the industry outlook for the financial year 2026 (FY2026) is positive. This is due to factors boosting demand and a possible reduction in GST rates, which could further accelerate market growth. Wholesale sales of two-wheelers in India grew 9% to 15 lakh units in July 2025. Companies (OEMs) maintained a good supply ahead of the festivals.

However, retail sales declined 6.5% year-on-year in July due to weak demand in cities and a decrease in the number of buyers in rural areas due to heavy rains. The rating agency estimates that retail demand will improve significantly during the festivals.

Export of electric vehicles increased

ICRA said that the export of two-wheelers grew by 32% in July 2025, which gave good support to the industry. Meanwhile, there was a slight decline in the sales of electric two-wheelers. In July, it fell to 102,900 units, i.e., a decrease of about 2%. However, ICRA says that the share of electric two-wheelers remains stable at between 6% and 7% in the total domestic two-wheeler market.