India’s two-wheeler sales top 20 million for first time in FY26

By: Team India Tracker

Despite a lower 5% GST, electric two-wheelers are losing their price edge, making conventional vehicles more competitive for cost-sensitive buyers

Registrations of two-wheelers, including both internal combustion engine (ICE) and electric models, crossed the 20 million mark for the first time in a financial year in FY26, according to VAHAN data. As of March 22, registrations stood at 20.05 million, surpassing the pre-Covid peak of 18.4 million in FY19 and rising from 18.3 million recorded in FY25. 

The milestone underlines the strength of India’s mass mobility segment, driven by rural demand, urban commuting needs and post-pandemic recovery. But beneath the headline number lies a more complex story—one where electrification continues to lag far behind policy ambition. 

Electric two-wheeler penetration remains modest. As of March 22, FY26, it stood at 6.27 per cent and is expected to close the year at around 6.5 per cent—only a marginal increase from 6.06 per cent in FY25. In absolute terms, electric two-wheeler registrations rose to about 1.25 million this year, up from 1.1 million last year. 

These numbers fall well short of projections by NITI Aayog. In 2019, in partnership with the Rocky Mountain Institute, it had envisioned electric two-wheelers accounting for 80 per cent of new sales by 2030. This target was later scaled down to 35–40 per cent in a 2022 report with BCG. Even under this revised scenario, penetration was expected to reach 13–15 per cent by FY26 — more than double current levels. 

The gap is significant. To meet the 2030 goal, annual electric two-wheeler sales would need to touch 10–11 million units. Based on current volumes, that implies an eight- to nine-fold increase within the next four years — a steep climb given existing trends. 

Policy signals have also played a role. Industry experts point to the government’s decision to cut GST on two-wheelers from 28 per cent to 18 per cent, which narrowed the cost differential between ICE and electric vehicles. While electric two-wheelers continue to attract a lower 5 per cent GST, the relative price advantage has diminished, making conventional vehicles more competitive for price-sensitive buyers. 

Market dynamics within the electric segment have also shifted. Ola Electric, once a dominant player, saw a sharp drop in market share in FY26, with sales falling by over 150,000 units compared to the previous year. However, this decline was offset by gains from established manufacturers such as TVS Motor Company, Bajaj Auto, Hero MotoCorp and startup Ather Energy, all of which expanded their presence in the electric segment. 

What does this divergence signify? 

First, the resilience of the ICE market remains intact. For millions of consumers, affordability, range anxiety, charging infrastructure and resale value continue to favour conventional vehicles. Second, the electric transition is happening — but at a slower, more incremental pace than policymakers had anticipated. 

Third, the data underscores a broader structural challenge. Electrification is not just about vehicle adoption; it requires parallel investments in charging infrastructure, battery supply chains and financing ecosystems. Without these, adoption is likely to remain gradual. 

For India’s mobility transition, the message is clear. Crossing 20 million in two-wheeler registrations reflects strong demand and economic recovery. But the dominance of ICE vehicles suggests that policy, pricing and infrastructure gaps still constrain the shift to electric. 

The road to 2030, at least for now, looks longer than planned.