In a direct appeal to policymakers, Siddhartha Lal, Chairman of Royal Enfield, has called for a uniform goods and services tax (GST) on all two-wheelers. His campaign, #TwoWheelsOneGST, argues that equalizing GST rates across segments is critical for India to maintain and amplify its status as the world leader in two-wheeler manufacturing.
India’s Two-Wheeler Success Story
Lal asserts, “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.” India has set global standards in technology, cost, quality, and distribution, drawing even international manufacturers to set up production here. Driven by a vast domestic market and strong government support, local brands stand tall, with unmatched scale and capability.
Why Government is Planning a Variable Tax on Bikes?
The government is exploring a variable tax structure on bikes mainly for these reasons:
- Revenue Generation – Higher-capacity bikes are often seen as premium or luxury products, so the government considers taxing them more to increase revenue without burdening mass-market commuters.
- Progressive Taxation – The idea is to keep taxes low on smaller bikes (sub-350cc), which form the bulk of India’s two-wheeler market, to make them affordable for the common man while charging more for costlier, niche segments.
- Environmental Concerns – Larger bikes typically have higher engine capacity, which could mean more emissions and fuel consumption; some policymakers argue that higher taxes might discourage overuse.
- Aligning With Luxury Tax Principles – Similar to cars and SUVs, where bigger engines attract higher cess, the government is considering a similar approach for motorcycles.
The Need for Uniform GST: Value and Volume
Indian manufacturers already dominate the small-capacity segment worldwide. Heavy investments are helping them make inroads into mid-capacity motorcycles, with growing appeal among global riders who are moving from larger, higher-displacement bikes to Indian-made mid-size machines. “By delivering exceptional value, we are drawing riders worldwide to shift from larger, higher-displacement machines to Indian-made mid-size motorcycles,” Lal explains.
A uniform GST rate—specifically 18%—across all two-wheelers is crucial. Lower taxes for smaller bikes will broaden market accessibility, but raising GST for bikes above 350cc risks damaging a segment key to India’s international edge.
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The Risks of a Split Tax Regime
Lal warns, “A differential rate would dramatically shrink the domestic >350cc segment, and choke the investment needed for India to compete globally.” He highlights three main dangers:
- Cripple Investment and Scale: Higher tax on mid-to-large motorcycles would reduce investment and limit growth precisely where India is building global momentum.
- Restrict Global Reach: Penalizing the >350cc segment undermines India’s ability to compete on product range and quality, harming brand equity and dealer networks outside India.
- Hand an Opening to Foreign Competitors: Without uniformity, rivals from other countries would capture the mid-size market, weakening India’s leadership even in the segments it now dominates.
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Missed Revenue and Missed Opportunities
Lal points out, “Motorcycles above 350cc make up around 1% of India’s two-wheeler market.” Raising GST on these bikes would add negligible revenue but substantially contract the segment. For Indian riders, these motorcycles are “efficient, affordable alternatives to cars,” not luxury items. This segment also delivers broader national benefits—lower fuel use, lower maintenance costs, and reduced fuel imports.
Securing Decades of Global Leadership
India already leads China, Japan, Europe, and the U.S. in two-wheelers. Lal writes, “A uniform 18% GST will not only secure this leadership but also enable India to dominate the global electric two-wheeler market.” By scaling up electric vehicle manufacturing, India can anchor allied industries—from batteries and semiconductors to advanced electronics—potentially becoming the world’s hub for next-generation mobility. Lal’s vision: “Creating a powerful manufacturing ecosystem that ensures India’s global leadership for decades to come.”
The Heart of the Message
Siddhartha Lal’s urgent plea combines pride, data, and caution. He wants policy to match ambition and innovation, making sure India remains the powerhouse in the global two-wheeler industry. The call for #TwoWheelsOneGST is a rallying point for fairness and progress, aimed at nurturing a segment that keeps India ahead on the world stage.
