On August 15, 2025, Prime Minister Narendra Modi announced that his government would bring reforms in GST, and many things will become cheaper. These changes, called GST 2.0, were implemented on September 22, 2025. Since then, prices of many things have come down, and the automobile sector has seen the biggest benefit. Car prices have come down by lakhs and motorcycle prices by thousands. Companies are highlighting this in advertisements, which are directly passing on the benefits to buyers.
But there is one category that has not benefited, in fact, it has been hit hard, that is motorcycles above 350 cc. While most vehicles have become cheaper, these bikes have actually become costlier under GST 2.0. Earlier, they were charged 28% GST plus 3% cess (total 31%). Now, they come under the new 40% GST slab (motorcycles above 350 cc are taxed at 40%). The government considers these big-engined motorcycles as luxury products, due to which they have increased the tax. But this classification seems unfair compared to cars. For example, small cars like Nexon, Swift, or i20 now attract only 18% GST without any cess. Big SUVs and luxury cars, which earlier faced tax of up to 50%, also now come under the flat slab of 40%, meaning their prices have come down. So, while a Range Rover has become cheaper by ₹30 lakh, a Royal Enfield or a Himalayan has become more expensive.
India is the world’s largest two-wheeler market, with around 20 million units sold in 2024. Although large motorcycles account for just 2% of the market, it still accounts for around 4 lakh bikes every year, hardly a small number. Raising taxes on this segment makes no sense. For example, the Bajaj Pulsar NS400 has become ₹14,000 more expensive, the Royal Enfield Himalayan 450 has become ₹26,000 more expensive, and the Super Meteor 650 has gone up from ₹3.72 lakh to ₹4.05 lakh. Indian companies like Bajaj and Royal Enfield are offering 400-650cc motorcycles at prices much lower than foreign brands, which has given buyers a lot of value. With this tax hike, the price gap between the smaller 349cc bike and the larger motorcycles has widened, leading many buyers to switch back to smaller capacity bikes.
The bigger issue is the long-term one. Indian manufacturers are among the strongest in the world, and they are investing heavily in research and development to make larger motorcycles that can compete in global markets like the US and Europe. For example, Royal Enfield already exports to the US, and BSA is active in the European market. But for these companies to succeed abroad, they also need a strong domestic market. If high taxes discourage Indian buyers from buying larger bikes, manufacturers will lose the incentive to invest in this segment. This could hurt India’s two-wheeler industry in the long run and slow down its ambitions to become a global leader in medium capacity motorcycles.
So, while GST 2.0 has been great for cars and small bikes, it seems unfair to consider motorcycles above 350cc as “luxury” and increase their taxes. If anything, these taxes should be reduced, not increased, to encourage Indian companies and support their growth in domestic and international markets.
