Royal Enfield is engaging with govt for a single GST rate of 18% on motorcycles: CEO

Royal Enfield, the manufacturer of Bullet motorcycles, is partnering with the government to impose a common Goods and Services Tax (GST) rate of 18% on all motorcycles, according to the company’s CEO.

As part of the GST 2.0 reforms, the tax rate on motorcycles up to 350 cc has been reduced to 18% from 28% previously while the tax rate on motorcycles above 350 cc has been raised to 40%.

“We have approached government agencies to see if we can have a single 18% equal slab as it will definitely help the 450cc and 650cc segments expand in India and thus take the product to international markets where there is potential,” said P Govindarajan, Managing Director, Eicher Motors, and CEO, Royal Enfield.

“In the more than 350 cc segment, with the higher GST rate, the take-up is a little less… If we don’t have a large scale, it puts pressure on that segment,” Govindarajan said.

If we do not invest enough in R&D and do not bring in products due to the 40% GST rate, Indian motorcycle makers, who are leaders outside India in the 450cc and 650cc segments, will lose the advantage of manufacturing in India. “Internationally, there is huge potential for 450cc and 650cc motorcycles,” Govindarajan said.

“If the government helps us achieve an equal tax rate of 18%, demand will be better, giving all of us (automakers) more room to invest, do R&D and build products that we can take global,” he added.

“If the volumes come down, the focus will be on the 350cc and below segment. We will miss this opportunity to make two-wheelers in India,” he said.

During the 33-day festive season, Royal Enfield sales rose by 50%. “Our bookings are continuing. We are confident that we will overtake the market in the next half of the ongoing financial year. Post the festive season,” he said, adding that GST reforms have made motorcycles under 350 cc more accessible.

Eicher Motors reported its strongest quarterly performance in Q2 as revenue from operations rose 45% to Rs 6,172 crore in the corresponding quarter of FY24-25 while EBITDA grew 39% to Rs 1,512 crore and profit after tax rose 25% to Rs 1,369 crore from Rs 1,100 crore last year. Royal Enfield also recorded its highest ever quarterly sales volume of 3,27,067 motorcycles, up 45% from 2,25,317 motorcycles sold during the second quarter of FY 2024-25.

“We had a fantastic festive season, achieving record sales of 2.49 lakh units. The GST reform undertaken by the Government of India has enhanced the accessibility of motorcycles below 350 cc and is reflected in the strong demand from customers,” Govindarajan said.

Its commercial vehicle arm, VE Commercial Vehicles (VECV), reported revenue of Rs 6,106 crore in Q2FY26, up 10.3%. EBITDA for the second quarter rose 8.0% to Rs 479 crore, from Rs 395 crore a year ago. Profit after tax was Rs 249 crore as against Rs 208 crore last year. VECV reported sales of 21,901 vehicles in the second quarter, up from 20,774 vehicles last year.