New Delhi: India’s domestic two-wheeler (2W) market is approaching a phase of structural stagnation, even as electric two-wheelers (E-2Ws) are set to witness explosive growth over the next decade, according to a report by Emkay Global Financial Services.
The brokerage firm projects that after a brief, policy-driven boost, the conventional internal combustion engine (ICE) two-wheeler segment will see muted expansion. “We expect the domestic 2W industry to stagnate at around 3% CAGR between FY26E and FY35E, coinciding with a strong consumer shift toward electric two-wheelers, whose volumes are projected to surge 13–15 times during FY25–35E,” the report said.
Following a short-term demand spike driven by GST cuts, growth in the ICE segment is expected to taper off as policy support normalizes and the market reaches saturation. The report notes that the domestic two-wheeler market is nearing a natural ceiling, with limited scope for further volume expansion beyond FY26.
India’s 2W market, it adds, has matured, with penetration in urban and semi-urban areas approaching saturation levels. Meanwhile, rural demand recovery remains uneven, and affordability challenges continue to affect entry-level motorcycle and scooter sales.
In contrast, the next wave of growth will be driven by electric mobility. “E-2Ws are expected to grow 13–15x over the next 10 years, while ICE 2W volumes may decline by nearly half during the same period,” the report stated, highlighting a fundamental consumer shift toward greener and more cost-efficient mobility options.
Emkay attributes this surge to multiple favorable factors—declining battery prices, continued policy incentives like FAME-II subsidies, an expanding charging network, and growing consumer trust in EV technology.
While the transition will be gradual, adoption is likely to accelerate as manufacturers widen their EV product portfolios and as electric vehicles become more economical to own and operate.
The report concludes that this transformation will significantly reshape India’s auto ecosystem, pushing automakers and component suppliers to pivot toward EV-focused strategies. Overall, it paints a mixed outlook—steady stagnation for ICE two-wheelers, but exponential growth for electric models—signaling a defining decade of change for India’s two-wheeler industry.
