India’s motorcycle market is undergoing a seismic shift. As of September 22, 2025, the Goods and Services Tax (GST) Council has approved a sharp hike in GST on motorcycles with engine capacities above 350cc—from an effective 31% (28% GST + 3% cess) to a flat 40%. This move has sent ripples through the premium motorcycle segment, impacting brands like Royal Enfield, KTM, Triumph, Harley-Davidson, and Bajaj Auto. While smaller bikes under 350cc now enjoy a reduced GST of 18%, the bigger machines are being taxed like alcohol and tobacco—classified as “sin and luxury goods”.
Let’s unpack what this means for manufacturers, consumers, and the future of India’s two-wheeler landscape.
🛵 The Tax Divide: Small vs. Big Bikes
The new GST regime introduces a clear bifurcation:
- Motorcycles under 350cc: GST reduced from 28% to 18%
- Motorcycles above 350cc: GST increased from 31% to 40%
This change is part of the government’s broader “GST 2.0” overhaul, which simplifies the tax structure into three slabs—5%, 18%, and 40%. While the majority of India’s two-wheeler market falls under the sub-350cc category, the premium segment—though smaller in volume—has been growing rapidly, driven by urban professionals and aspirational buyers2.
🔧 Who’s Feeling the Heat?
The biggest blow lands on Royal Enfield, India’s undisputed leader in the mid-size motorcycle segment. While its 349cc models like the Classic, Bullet, and Hunter now benefit from lower taxes, its flagship models—Himalayan 450, Guerrilla 450, Interceptor 650, Continental GT 650, and Super Meteor—are now significantly more expensive2.
Other affected manufacturers include:
- KTM: RC 390, Duke 390, Adventure 390 series
- Triumph: Speed 400, Scrambler 400X, Thruxton 400
- Harley-Davidson: X440 (co-developed with Hero MotoCorp)
- Bajaj Auto: Dominar 400, Pulsar NS400Z
- Aprilia: RS 457
Price hikes range from ₹13,000 to ₹34,000 depending on the model7. For example, the KTM 390 Adventure now costs over ₹4 lakh, up from ₹3.67 lakh.
💬 Industry Reaction: A Cry for Uniformity
Royal Enfield’s MD Siddhartha Lal has been vocal in opposing the split tax regime. He argues that penalizing motorcycles above 350cc undermines India’s global competitiveness in the premium bike segment. “Lowering GST for under-350cc will help broaden access, but raising GST for above-350cc would damage a segment vital to India’s global edge,” Lal stated.
Industry analysts echo this sentiment, warning that the hike could:
- Stall investment in premium bike manufacturing
- Reduce India’s export potential
- Open doors for foreign competitors
- Create pricing distortions that confuse consumers
💸 Will Buyers Back Off?
In the short term, yes. The festive season—typically a peak time for vehicle purchases—may see a dip in demand for high-capacity motorcycles. Enthusiasts who were eyeing a Himalayan or a Duke 390 might now reconsider or delay their purchase.
However, long-term impact may be muted. Premium motorcycle buyers are generally less price-sensitive than mass-market consumers. For many, the emotional and aspirational value of owning a big bike outweighs the financial pinch.
Still, the hike could push manufacturers to:
- Focus more on sub-350cc models for volume
- Rework pricing strategies and financing options
- Explore localization to reduce production costs
🌍 Global Implications
India has emerged as a hub for mid-capacity motorcycle manufacturing. Brands like Triumph, KTM, and Harley-Davidson have partnered with Indian firms to produce affordable performance bikes for global markets. A punitive tax regime risks derailing this momentum.
Moreover, the classification of motorcycles above 350cc as “sin goods” raises philosophical questions. Is a motorcycle a luxury indulgence or a legitimate lifestyle choice? Should performance and safety features be penalized simply because they come with a bigger engine?
🏁 Final Thoughts
The GST hike on motorcycles above 350cc is a bold move that reflects the government’s intent to simplify taxation and curb luxury consumption. But it also risks alienating a growing segment of riders who see motorcycling not just as transport, but as passion, identity, and freedom.