New Delhi: India’s two-wheeler industry is expected to grow 7-9 per cent in fiscal 2027, with total volumes likely to reach around 29 million units, according to a report by Crisil Ratings. The report said the domestic market will continue to remain the main growth driver, supported by improved affordability after the Goods and Services Tax (GST) rate rationalisation.
At the same time, exports are expected to grow faster than the domestic market for the third consecutive year, providing additional support to the overall industry. It stated “Domestic market, which remains the industry’s largest base, is likely to hold steady on improved affordability following Goods and Services Tax (GST) rates rationalisation”.
Crisil Ratings said revenue is expected to grow steadily, mainly driven by higher sales volumes. Premiumisation, or rising demand for higher-capacity motorcycles, will also support revenue growth.
This increase in revenue is expected to help companies maintain operating margins, as higher production and sales will help offset the impact of elevated commodity costs.
The report is based on an analysis of six original equipment manufacturers (OEMs), which together account for nearly 95 per cent of total industry volume. Domestic sales remain the backbone of the industry, contributing nearly 80 per cent of total volume, while exports account for about 20 per cent.
According to the report, fiscal 2026 has seen mixed performance so far. In the first half, volumes remained flat due to weak demand sentiment. However, sales improved from September after GST rate rationalisation reduced vehicle prices by 7-8 per cent, improving affordability.
Rural demand improved due to a healthy kharif crop and rising farm income. Urban demand also strengthened following the GST rate cut. In addition, soft interest rates and easing inflation supported demand.
The report also mentioned that entry-level motorcycles up to 125cc continue to dominate the market, with a share of around 73 per cent.
However, demand is gradually shifting towards higher-capacity motorcycles in the 150-350cc segment. The share of these motorcycles has increased from around 23 per cent in fiscal 2025 to around 25 per cent this fiscal, showing improving affordability and growing premiumisation.
The report also noted that the proposed India-US trade agreement is expected to create some opportunities in motorcycles above 500cc by reducing import duties and increasing consumer choice.
However, this segment makes up less than 1 per cent of total industry volume, so the overall impact on the industry will be limited.
Domestic companies are expected to remain protected as they mainly focus on entry-level and economy segments, which account for most of the sales.
These factors are expected to drive revenue growth of 10-12 per cent next fiscal, after an expected growth of 15-17 per cent this fiscal.
The report added that steady profitability will help companies generate enough internal funds to support capital expenditure of around Rs 6,000 crore in fiscal 2027, while keeping capex intensity below 0.4 times.
