Royal Enfield has warned that India risks losing its advantage in the global mid-size motorcycle market if the government does not reconsider the steep 40% GST levied on models above 350cc. The company said the sharp disparity in tax rates–18% for motorcycles up to 350cc and 40% for anything above–could suppress demand, reduce scale, and ultimately weaken investment in future products.
“The reduction of the GST rate to up to 350cc has really helped in getting the demand. In more than 350cc the uptake is slightly lower, even though the bounce rate is better. It is picking up,” B. Govindarajan, Managing Director of Eicher Motors Limited (EML) and CEO of Royal Enfield, said during Q2FY26 earnings call.
Govindarajan cautioned that weaker volumes in the 450cc-650cc category could have wider implications for the industry’s long-term growth. “If you don’t get scale, it puts pressure on all organisations that have to focus on this segment,” he said. “If you don’t invest enough in R&D because of a 40% GST rate, we lose out on a fantastic opportunity. Indian manufacturers are global leaders in this space, but high taxation limits our ability to build scale and remain competitive globally.”
He noted that the mid-size segment has “huge international potential” and argued that a uniform GST rate of 18% across all motorcycle categories would boost demand, justify future investments, and help India consolidate its leadership. “If the rates are higher and volumes come down, R&D expenses will be lower and the focus will shift entirely to 350cc and below,” he said. “We will miss out on the opportunity to make India a global manufacturing hub for 450cc and 650cc motorcycles.”
Royal Enfield has been advocating for a uniform GST rate through SIAM, and continues to engage with government agencies to present the industry’s position.
Despite concerns over the premium motorcycle category, Royal Enfield posted its best-ever festive performance this year. The company sold more than 2.49 lakh motorcycles during September and October, a 26% increase over the previous year. In October alone, sales rose 13% year-on-year to 1,24,951 units, while exports stood at 8,107 units.
Govindarajan said demand indicators remained strong across channels: “Walk-in conversions, teleconversions, and online enquiries have all risen. Our enquiry-to-booking conversion rate has gone up from 20-21% earlier to almost 29-30% after the GST reform.”
The company also saw a strong pre-buying trend in the 450cc and 650cc categories ahead of the GST announcement, followed by a surge in demand for the 350cc portfolio once the lower tax slab came into force.
Between April and October 2025, Royal Enfield recorded strong year-to-date growth across its motorcycle lineup. Sales of motorcycles up to 350cc rose 28% year-on-year to 6,20,484 units, driven by GST-led price reductions, refreshed models, and improved rural consumption. The >350cc category grew 18% to 96,370 units, supported by recovering demand for the 450cc and 650cc platforms.
Royal Enfield currently offers a range of motorcycles from the Hunter 350, Classic 350, and Meteor 350 to the Interceptor 650, Continental GT 650, Super Meteor 650, and Classic 650. In the 450 cc segment, the company offers the Himalayan and Guerrilla. At the EICMA 2025 show in Milan, the company showcased its Bullet 650, Flying Flea S6, and a working prototype of the Himalayan 750, reinforcing its push in the mid-size segment globally.
In Q2 FY26, Eicher Motors reported a 45% year-on-year jump in consolidated sales to ₹6,171.59 crore and a 25% rise in net profit to ₹1,369 crore–its best-ever quarterly performance. EBITDA rose 39% to ₹1,512 crore, though margins softened slightly to 24.5% from 25.5% a year earlier.