Lal warned that a split tax regime could weaken India’s global leadership in the sector, stall investment, and create an opening for foreign competitors.
30 Aug 2025 | 3075 Views | By Darshan Nakhwa
Siddhartha Lal, Executive Chairman of Eicher Motors, has issued a strong appeal to policymakers for a uniform 18 percent Goods and Services Tax (GST) across all two-wheelers. In a statement posted on LinkedIn on Saturday, Lal warned that a split tax regime could weaken India’s global leadership in the sector, ...
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Siddhartha Lal, Executive Chairman of Eicher Motors, has issued a strong appeal to policymakers for a uniform 18 percent Goods and Services Tax (GST) across all two-wheelers. In a statement posted on LinkedIn on Saturday, Lal warned that a split tax regime could weaken India’s global leadership in the sector, stall investment, and create an opening for foreign competitors.
Lal pointed out that motorcycles above 350cc account for just 1% of India’s two-wheeler market, and raising GST on them would generate negligible revenue while contracting the segment. “For Indian riders, these motorcycles are not luxury goods; they are efficient, affordable alternatives to cars, offering lower fuel consumption and maintenance — benefits that also help reduce India’s fuel imports,” he added.
Lal placed the debate in the broader context of the Make in India initiative, calling the two-wheeler industry the clearest success story of the campaign. It is, he said, the only manufacturing sector where Indian brands lead globally, setting benchmarks in quality, technology, cost-efficiency, and distribution. With strong government support and a large domestic base, Indian manufacturers have achieved scale and capability unmatched elsewhere — even attracting global competitors to set up production in India.
Highlighting the strides Indian brands have made in recent years, Lal noted that they already dominate the small-capacity motorcycle segment worldwide. Through significant investments, they are now making deep inroads into the mid-capacity segment. “By delivering exceptional value, we are drawing riders worldwide to shift from larger, higher-displacement machines to Indian-made mid-size motorcycles,” Lal said.
To sustain this momentum, a uniform GST of 18% across all two-wheelers is critical. While lowering GST for motorcycles under 350cc will help broaden access, raising GST for those above 350cc would damage a vital segment and undermine India’s global leadership, Lal stressed.
According to Lal, a split tax regime could also “cripple investment and scale” in the mid-capacity segment, which has been the focus of significant research, development, and production by Indian manufacturers. “A differential rate would dramatically shrink the domestic >350cc segment and choke the investment needed for India to compete globally,” he said.
Furthermore, he warned that such a policy could restrict India’s ability to offer a competitive range of products globally and undermine domestic brands’ efforts to build strong dealer networks and brand equity overseas. “A punitive GST on >350cc would relegate us to smaller-capacity two-wheelers,” he said.
More critically, it could allow global rivals — who do not face such tax distortions in their home markets — to capture the mid-size segment internationally before re-entering India’s smaller-capacity market, where local manufacturers currently enjoy dominance.
Lal emphasized that India is already the world’s largest two-wheeler market, surpassing China, Japan, Europe, and the United States. He argued that a consistent tax framework would not only safeguard this position but also enable India to dominate the global electric two-wheeler industry, positioning the country as a hub for next-generation mobility.
“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 said.
The debate over GST on two-wheelers comes at a time when the central government is itself reviewing the tax structure. On August 15, Prime Minister Narendra Modi announced that a broad review of the GST regime is underway and hinted that relief could be expected by Diwali this year. Although he did not specifically mention the automobile sector, multiple media reports suggest that the government is considering a sharp reduction in GST rates on vehicles — particularly entry-level cars and two-wheelers — from the current 28% to 18%. According to these reports, the government has proposed a simplified three-tier GST structure, with rates at 5%, 18%, and a higher 40% slab for a select few products.