TL;DR
India's two-wheeler market is forecast to grow 6-9% in FY2026 due to stronger demand and favorable policies, despite a steady but slower adoption of electric two-wheelers.
India's two-wheeler industry is projected to experience a robust 6-9% year-on-year growth in domestic volumes for Fiscal Year 2026, according to ICRA. This positive outlook follows a significant rebound in December 2025, where retail volumes surged by 9.5% annually. The growth is primarily attributed to improving replacement demand, stable rural incomes, a recovery in urban consumption patterns, and supportive government policies such as GST rate cuts under the GST 2.0 framework.
The December 2025 surge was also bolstered by year-end discounts and customers making purchases ahead of anticipated price increases in January 2026. Enhanced affordability, better financing options, and increased showroom footfalls played a crucial role, particularly for entry-level motorcycles and scooters. Despite this growth, electric two-wheeler penetration remained stable at 6-7% during the first nine months of FY2026, indicating a gradual adoption phase.
