As the Union Budget 2025 approaches, two-wheeler manufacturers are optimistic about measures that could revive rural demand and accelerate the shift toward electric mobility. The government’s focus on boosting consumption and putting more money in the hands of the common man is expected to benefit the rural-focused two-wheeler segment significantly.
The industry is hopeful that a revision in income tax slabs will leave consumers with higher disposable incomes, driving discretionary spending in rural areas. This, in turn, could provide a much-needed lift for entry-level two-wheelers, a critical market for manufacturers.
Market veterans highlight the importance of accessible financing options, noting that making electric two-wheelers affordable in both urban and rural markets is key to unlocking their full potential.
At the same time, the sector is calling for continued support for electric vehicles, particularly through an extension of the FAME-III subsidy beyond March 2025. Direct incentives to build a robust EV supply chain, especially for batteries, are seen as essential to reduce import dependency and increase domestic value addition.
Stakeholders are pushing for performance-linked incentives to strengthen local manufacturing and position India as a global leader in EV technology.
Simplifying the Goods and Services Tax (GST) structure is another pressing demand. Industry players are advocating a uniform 5 percent tax across EVs, components, and charging infrastructure, which they believe will reduce costs and foster growth.
Dinkar Agrawal, CTO and COO of Oben Electric emphasised that such measures could support Make-in-India initiatives while addressing working capital challenges.
Electrification of last-mile delivery is also seen as crucial to achieving India’s environmental and economic goals. Akash Gupta, Co-Founder of Zypp Electric, proposed extending the GST framework for EV purchases to logistics services and introducing a per-kilometre subvention scheme for aggregators.
He further said that these steps would incentivise fleet expansion and bring India closer to its Net Zero target by 2070.
With consistent policy support, investments in advanced technologies, and efforts to make EVs more accessible, the two-wheeler industry is poised to play a pivotal role in shaping India’s mobility future. The budget is a critical opportunity to address challenges, build momentum, and steer the sector toward sustainable growth and innovation, say experts.
Over the past three months, shares of major two-wheeler players have been on a slippery slope. Hero MotoCorp, often considered the flagbearer of rural demand, has seen its stock tumble 20 percent. Bajaj Auto hasn’t fared differently either, with its shares shedding 18 percent, while TVS Motor has faced a 10 percent slide.
Even Ola Electric Mobility, a disruptor in the EV space, has not been spared, with its valuation dipping 12 percent.
However, February 1 could mark a turning point. If measures to boost rural demand and accelerate EV adoption find their way into the budget document, these stocks could witness a significant rebound, reigniting investor optimism in the sector.
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