Two-wheeler sales in India likely to grow by 6-9% in FY26: ICRA
Ratings agency ICRA in its latest report has said that two-wheeler sales in India are estimated to grow by 6-9 per cent in FY26 as compared to the previous fiscal, riding on the recent GST rate reduction, which is anticipated to support affordability and stimulate demand, besides steady replacement demand, urban recovery and healthy rural incomes driven by a normal monsoon. It said domestic wholesale volumes grew by 7.2 per cent on a YoY basis in August 2025 to 18 lakh units, as OEMs maintained healthy dispatches ahead of the festive season.
ICRA further said retail sales, however, grew by a marginal 2.2 per cent YoY, with growth constrained by excess rains and some purchase deferment linked to the GST rate cut; a pick-up is expected during the upcoming festive season. In the electric two-wheeler segment, it said retail volumes stood at 1,04,725 units in August 2025, showing modest sequential growth of 1.8 per cent, with penetration remaining in the 6-7 per cent range.
On the tractors segment, the ratings agency said the recent GST rate cut on tractors to 5 per cent is expected to further support demand, particularly during the upcoming festive season. It added that the segment has demonstrated robust performance, with wholesale volumes reporting a significant growth of 28.2 per cent YoY in August 2025, building on a cumulative growth of 11.7 per cent YoY for the first five months of FY2026. It stated that tractor volumes are estimated to grow at a moderate pace of 4-7 per cent in FY2026. This growth is firmly backed by above-normal monsoons, which are expected to support agricultural production.
It further said the early onset of monsoon has led to the country receiving rainfall at 108 per cent of the long period average until September 17, 2025. Consequently, tractor demand remained strong in August, with retail volumes rising by 30.1 per cent YoY, driven by positive farmer sentiments and adequate rainfall. It added that the industry also anticipates potential pre-buying ahead of the TREM V emission norms proposed to take effect from April 1, 2026.
