Eicher, Bajaj Auto's premium motorbike sales to take a hit

Bajaj Auto and Royal Enfield dominate the market for premium bikes above 350cc capacity

- Ayaan Kartik

Indian bike makers such as Royal Enfield Ltd and Bajaj Auto Ltd will soon have to grapple with higher taxes on their most premium products, with the GST Council having decided to raise the tax on two-wheelers with an engine capacity above 350cc to 40%. Earlier, such two-wheelers attracted 28% GST with a 3% cess, taking the total tax to 31%.

The government simultaneously decreased the tax on two-wheelers below 350cc, which covers the entire mass-market segment, from 28% to 18% to boost demand.

Siddhartha Lal, chairperson of Eicher Motors, Enfield's parent, had requested the government for a single tax rate for all two-wheelers, saying differential taxation would put premium bike makers at a disadvantage. This would end up shrinking the segment, hurting the ability of domestic firms to invest in exports, he said.