TL;DR
India's two-wheeler industry faces challenges in 2026, including impact from GST changes, cessation of EV subsidies, and competition from the used-car market.
The Indian two-wheeler industry is at a significant turning point in 2026, characterized by consolidation rather than rapid acceleration. While entry-level internal combustion engine (ICE) motorcycles continue to maintain their market presence, the electric two-wheeler segment faces several headwinds. These challenges include the impact of GST 2.0 reforms, which have narrowed the price gap between ICE and electric two-wheelers, making ICE options more attractive.
The government's decision not to extend existing subsidies like FAME and PM E-Drive programs for electric two-wheelers and three-wheelers beyond the current fiscal year further complicates the landscape for EV manufacturers. Additionally, a robust used-car market is emerging as an alternative for consumers, potentially straining the traditional value proposition of two-wheelers. Premium motorcycles (above 350cc) also face challenges due to higher GST rates, which have increased entry barriers despite aspirational demand.
