Rajiv Bajaj calls GST cut a ‘tactical hit, strategic miss’ as 350cc bikes left out
GST overhaul: Rajiv Bajaj warned that manufacturers may now be forced to realign products to remain under the 350cc threshold, effectively shrinking the higher-displacement segment in India.
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Bajaj Auto Managing Director Rajiv Bajaj has termed the Centre’s decision to cut GST on two-wheelers as a “tactical hit but a strategic miss,” voicing disappointment over the exclusion of motorcycles above 350cc from the reduced 18% tax slab.
In an interview with CNBC TV18, Bajaj said the government’s move to keep larger motorcycles under the higher tax bracket was a lost opportunity for the industry, despite their relatively small share in the market.
“While 350cc and above account for just 1% of the industry by volume and about 4% by value, for Bajaj this is around 3% of volume and 7% of value. For Royal Enfield, the share would be even higher,” Bajaj explained. “We had appealed for a uniform rate across the two-wheeler industry. Though it may sound like only 2% of the industry, in absolute terms, this segment is getting close to 200,000 motorcycles per year. That’s not insignificant, especially when global volumes for such products are under a million. Two Indian OEMs have a very strong global footprint, and nearly half of Bajaj’s production is exported. A uniform GST cut would have helped us scale further in this segment, which is important for brand image and profitability. In that sense, this is a strategic miss.”
Bajaj warned that manufacturers may now be forced to realign products to remain under the 350cc threshold, effectively shrinking the higher-displacement segment in India.
“The 350cc-plus segment will become practically insignificant in India. That’s not good for the long term because OEMs will find it very difficult to develop products solely for exports. Nobody wins here—the consumer loses, the manufacturer loses, and the government loses,” he said.
He further explained that single-cylinder motorcycles above 350cc, typically up to 450cc, may be re-engineered to fall below the tax threshold. Twin-cylinder or larger multi-cylinder bikes will remain in the premium space, but their sales volumes are minuscule.
At the same time, Bajaj welcomed the GST cut on smaller motorcycles, cars, buses, trucks, and ambulances from 28% to 18%.
“The two-wheeler industry, which never really recovered after COVID, will finally head to a new high,” he noted.
