A first: Two-wheeler sales cross 20 million in FY26, shows VAHAN data

But electric penetration lags NITI Aayog's targets

For the first time in a financial year, India’s two-wheeler market, including both internal combustion engine (ICE) and electric models, crossed the 20 million mark in registrations in FY26, according to VAHAN data. The previous peak was in pre-Covid FY19, when registrations stood at 18.4 million.

 

As on March 22 this financial year, registrations touched 20.05 million, against 18.3 million recorded for the full financial year in FY25.

 

Despite this milestone, the key challenge remains. The government’s ambitious target for electric two-wheeler penetration by 2030 now seems increasingly unrealistic, even after projections have been sharply reduced.

 

Based on the latest VAHAN figures for FY26, with just a few days left in the financial year, electric two-wheeler penetration (motorcycles and scooters) stood at 6.27 per cent as of March 22 and is expected to end the year at around 6.5 per cent, a marginal increase over last year.

 

In FY25, e-two-wheeler penetration was at 6.06 per cent, with 1.1 million vehicles registered, according to VAHAN data. In contrast, as of March 22 this financial year, total electric two-wheeler registrations have risen to 1.25 million. 

 

This is nowhere close to even the lowest target set by NITI Aayog, which has revised its projections on electric two-wheeler penetration over time. In 2019, NITI Aayog, along with the Rocky Mountain Institute, had projected that e-two-wheeler penetration in new sales would reach 80 per cent by 2030. 

 

However, this target was sharply scaled down in a subsequent 2022 report by NITI Aayog in collaboration with BCG, which reduced the penetration target to 35-40 per cent. Even then, NITI Aayog projected that to achieve this goal, e-two-wheeler penetration should reach 13-15 per cent by FY26.

 

The report also projected that, to meet the 2030 target, the industry would need to reach annual sales of 10-11 million electric two-wheelers. Based on current numbers, this would require sales volumes to grow by a staggering eight to nine times over the next four years.

 

Auto industry experts point out that one key factor behind overall two-wheeler sales crossing the 20 million mark, with a clear skew in favour of ICE vehicles, was the government’s decision to reduce the goods and services tax (GST) on these vehicles from 28 per cent to 18 per cent. This narrowed the tax differential, making ICE vehicles relatively more attractive compared to electric vehicles, which continue to attract 5 per cent GST.

 

Additionally, one of the top players in the electric two-wheeler space, Ola Electric, saw a sharp decline in market share in FY26, selling over 150,000 fewer vehicles than in the previous financial year. However, incumbent players such as TVS Motor, Bajaj Auto, Hero MotoCorp, and startup Ather not only offset this decline but also contributed to the overall growth of the electric two-wheeler segment.