Royal Enfield: Uniform 18% GST on Two-Wheelers

New Delhi, Aug 30 (PTI) Mid-size motorcycle maker Royal Enfield on Saturday called upon the government to consider a uniform GST rate for two-wheelers, including higher capacity bikes.

According to various reports, the revised GST structure could bring down the tax incidence on smaller bikes to 18 per cent while higher capacity motorcycles could come under the ambit of higher taxation.

Presently, automobiles are taxed at 28 per cent, which is the highest GST slab. A compensation cess, ranging from 1 to 22 per cent, is levied on top of this rate, depending on the type of vehicle.

In a post on LinkedIn, Eicher Motors Executive Chairman Siddhartha Lal said that Indian brands already dominate the small-capacity segment worldwide, and through heavy investment, the industry is now making deep inroads into mid-capacity motorcycles.

"By delivering exceptional value, we are drawing riders worldwide to shift from larger, higher-displacement machines to Indian-made mid-size motorcycles. To sustain this momentum, a uniform GST of 18 per cent across all two-wheelers is critical," Lal said.

Royal Enfield, a part of Eicher Motors Ltd, is a leader in mid-sized motorcycles.

"Lowering GST for less than 350cc will help broaden access, but raising GST for over 350cc would damage a segment vital to India's global edge," Lal stated.

A differential rate would dramatically shrink the domestic over 350cc segment, and choke the investment needed for India to compete globally, he added.

Success abroad requires a wide and competitive product range and a punitive GST on over 350cc would relegate the industry to smaller capacity two-wheelers, and undermine Indian brands' ability to build strong dealer networks and brand equity worldwide, he said.

Lal asserted that rivals from countries without such distortions would seize the mid-size segment internationally, then push back into the smaller-capacity market where India currently leads.

He noted that motorcycles above 350cc make up around 1 per cent of India's two-wheeler market.

"Raising GST on them would add negligible revenue but contract the segment. For Indian riders, these motorcycles are not luxury goods; they are efficient, affordable alternatives to cars, offering lower fuel use and maintenance - benefits that also help reduce India's fuel imports," Lal said.

India already leads China, Japan, Europe, and the US in two-wheelers, he said.

"A uniform 18 per cent GST will not only secure this leadership but also enable India to dominate the global electric two-wheeler market. By achieving scale in EVs, India can establish itself as the world's hub for next- generation mobility," he said.

This will anchor allied industries- from batteries to semiconductors and advanced electronics - creating a powerful manufacturing ecosystem that ensures India's global leadership for decades to come, Lal added.

Lal said India's two-wheeler industry is the clearest success story of the Make in India initiative and the only manufacturing sector where Indian brands lead globally.

The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation and scrap the 12 per cent and 28 per cent GST rates.

Currently, GST is a 4-tier structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent.