India’s two-wheeler market poised to cross 29 million units in FY27; Exports, premiumisation to drive growth

India’s two-wheeler industry is set for a steady recovery in fiscal 2027, with volumes expected to rise 7-9%, crossing the 29 million-unit mark, driven by domestic demand and strong export growth, according to data collated by Crisil Ratings. Domestic sales account for nearly 80% of total volumes. Fiscal 2026 saw flat volumes in H1 due to weak sentiment, followed by a sharp uptick after the GST rate rationalisation, which reduced two-wheeler prices by 7-8%. Improved rural demand, supported by a healthy kharif crop and rising farm incomes, along with stronger urban consumption and soft interest rates, underpinned the growth rebound.

Motorcycles steady, scooters drive incremental growth

“Domestic two-wheeler volumes are likely to grow 6-8% in FY27, broadly in line with the current fiscal. Motorcycles, which account for 60% of domestic sales, are expected to post mid-single-digit growth, while scooters, including e-scooters, could see double-digit gains,” said Anuj Sethi, Senior Director, Crisil Ratings. Increasing urban usage, female participation, and last-mile mobility needs are driving scooter demand, helping the segment gain share in the overall mix.

Premiumisation gains Momentum

Entry-level motorcycles up to 125cc dominate with a 73% share, but demand for 150-350cc models has risen from 23% in FY25 to 25% this fiscal, reflecting improving affordability. High-capacity motorcycles above 500cc, which may benefit from the India-US trade agreement via lower import duties, represent less than 1% of total volume, limiting the broader industry impact.

Exports continue to support volume and revenue

Exports, contributing roughly 20% of industry volumes, are expected to remain a robust growth driver. Crisil projects export volumes to grow 21-23% in FY26, sustaining mid-to-high teen growth in FY27, led by Latin America, Africa, and South Asia. OEMs’ focus on expanding distribution networks and commuter-focused offerings will further support overseas traction.

Revenue, margins, and capex outlook

Revenue for FY27 is projected to grow 10-12%, following 15-17% growth this fiscal, with operating margins likely to stay around 16%, despite elevated commodity costs such as steel and aluminium. Healthy margins and revenue growth are expected to generate internal accruals of ~₹6,000 crore, funding capital expenditure while keeping leverage low.

Sustaining momentum will hinge on trends in rural and urban incomes, commodity prices, and recovery across export markets, which will remain critical for visibility on future volume growth.