Exports are set to outpace domestic market growth for the third consecutive year, while operating margins are expected to hold at around 16%.
17 Feb 2026 | 1 Views | By Shruti Shiraguppi
India's two-wheeler industry is projected to grow 7-9% in fiscal 2027 to reach approximately 29 million units, driven by a combination of domestic demand recovery following GST rationalisation and sustained export momentum, according to a Crisil Ratings analysis released on February 17, 2026, covering six original equipment manufacturers that together ...
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India's two-wheeler industry is projected to grow 7-9% in fiscal 2027 to reach approximately 29 million units, driven by a combination of domestic demand recovery following GST rationalisation and sustained export momentum, according to a Crisil Ratings analysis released on February 17, 2026, covering six original equipment manufacturers that together account for nearly 95% of industry volume.
Domestic sales, which contribute about 80% of total volume, recovered in the second half of fiscal 2026 after a flat first half, as the GST rate cut lowered vehicle prices by 7-8%, a healthy kharif crop bolstered rural demand, and soft interest rates eased affordability. Domestic volumes are forecast to grow 6-8% in fiscal 2027, with motorcycles — at roughly 60% of domestic volumes — expected to see mid-single-digit growth, while scooters are projected to grow at early double digits overall, with e-scooters in the mid-teens.
Says Anuj Sethi, Senior Director, Crisil Ratings, "In fiscal 2027, we expect domestic two-wheeler volume to grow 6-8%, broadly in line with the current fiscal. Motorcycles, which account for about 60% of domestic volumes and remain the largest segment, are likely to see mid-single-digit growth, reflecting a mature commuter base and stable rural demand. Incremental growth is expected to come from scooters—early double-digit overall and mid-teens for e-scooters—driven by rising urban usage, increasing female participation, and expanding last-mile mobility needs, thereby gaining share in the overall mix."
Within motorcycles, the 150-350cc segment's share has risen from approximately 23% in fiscal 2025 to around 25% this fiscal, as demand gradually shifts from entry-level models below 125cc, which still account for roughly 73% of volumes. The proposed India-US trade agreement is not expected to have a material impact on the industry, as it primarily concerns motorcycles above 500cc — a segment that represents less than 1% of total volume.
Exports, contributing around 20% of overall volume, are forecast to rise 21-23% this fiscal before sustaining mid-to-high teen growth in fiscal 2027. Latin America, Africa, and South Asia together account for nearly 90% of export volume.
Says Poonam Upadhyay, Director, Crisil Ratings, "Two-wheeler exports are expected to remain a strong growth driver. Volume is likely to rise 21-23% this fiscal and sustain mid-to-high teen growth in fiscal 2027, reflecting steady traction in overseas markets. Latin America, Africa and South Asia, together accounting for nearly 90% of export volume, are expected to anchor this expansion as demand conditions remain stable. The continued efforts of OEMs to widen distribution reach, deepen dealership networks and strengthen commuter-focused product offerings should further support growth across these core regions."
Revenue growth is projected at 10-12% in fiscal 2027 after an estimated 15-17% this fiscal, with operating margins expected to hold at approximately 16% — levels regained in fiscal 2025 after nearly a decade — as operating leverage offsets elevated aluminium and steel costs. The six OEMs analysed are expected to generate sufficient internal accruals to fund a capital outlay of approximately Rs 6,000 crore in fiscal 2027, while keeping capex intensity below 0.4 times net cash accruals.
Crisil flagged rural and urban income trends, commodity price movements, and the pace of recovery in export markets as the key variables determining the sustainability of growth momentum.