- India drastically cuts taxes on motorcycles up to 350cc while raising them to up to 40 percent for everything above
- Bajaj and Triumph are planning new 350cc models from April 2026, based on their existing 400cc platforms
- The production shift could lead to higher prices for popular 400cc motorcycles worldwide
In September 2025, India fundamentally restructured the taxation of motorcycles. Machines with an engine displacement of up to 350cc are now taxed at just 18 percent, down from the previous 28 percent. For motorcycles above this threshold, the tax rate is now up to 40 percent, compared to an effective rate of around 31 percent before. In a country where price plays a central role in purchasing decisions, this change has completely reshuffled the cards.
Royal Enfield Sits on the Winning Side
Those who have positioned most of their model range below the 350cc mark are among the beneficiaries of this reform. Royal Enfield was able to reduce the prices of its 350cc models by around 22,000 rupees (approximately 235 euros / 255 USD) following the tax change. Since nearly 87 percent of the company’s sales come from 350cc motorcycles, models like the Classic 350, Hunter 350, and Meteor 350 hit the market’s sweet spot perfectly. Monthly sales figures remain stable at around 100,000 units.
Classic Legends with its Jawa and Yezdi brands also benefits, as the entire portfolio sits below the threshold. Sales are rising slowly but steadily.
Triumph and Bajaj in a Bind
The picture looks very different for manufacturers whose core models are in the 400cc range. Bajaj Auto and Triumph Motorcycles have so far not passed the higher tax burden on to customers, absorbing it themselves to protect their sales figures. Triumph sells around 3,500 units of its 400cc motorcycles monthly and had even lowered prices on select models in October 2025 to remain competitive during the festival season.
The problem: had manufacturers fully priced in the tax increase, the price difference between comparable 400cc and 350cc models would have grown to nearly 50,000 rupees (approximately 535 euros / 580 USD). That would likely have caused demand for the more expensive models to collapse. But absorbing the tax gap eats into margins over time. In the long run, this is not a sustainable solution.
The Answer: 400cc Technology in a 350cc Package
The way out that the industry is now choosing is as pragmatic as it is predictable. Bajaj and Triumph are working on a new model range with 350cc displacement, set to launch as early as April 2026. Technically, the new engines are based on the existing 400cc platforms. A reduced bore size brings them below the tax-relevant threshold.
In practice, this means: instead of around 40 hp from the 400cc engine, the new 350cc units are expected to deliver approximately 35 hp. A difference that is barely noticeable in everyday riding, but one that makes a significant difference in purchase price. At Triumph, the downsized engines are set to be deployed across the entire existing 400cc range, while at Bajaj they will also appear in the Pulsar and Dominar lineups.
Sanjay Tripathi, an experienced industry consultant in the two-wheeler sector, views the development soberly: “The cost differential created by the GST structure is too significant to ignore. For customers, a 50cc reduction with marginal power loss does not materially change the riding experience, but it makes the product far more accessible.”
Tripathi adds that deeper localization combined with the new engine platform should make prices more competitive and increase unit volumes.
Why This Also Affects Buyers in Europe
What initially sounds like a purely Indian tax issue potentially has implications far beyond the country’s borders. India has developed into a global production hub for small and mid-displacement classes in recent years. Motorcycles like the Triumph Speed 400 or the Scrambler 400 X were not developed exclusively for the Indian market, but are significantly dependent on its production volumes. Only because demand in India was so high could manufacturers offer these models at such competitive prices in export markets.
The same applies to the Harley-Davidson X440, which has not even been offered internationally yet, as well as Royal Enfield’s newer 450cc platforms with the Guerrilla 450 and Himalayan 450.
If Indian demand now shifts significantly toward 350cc, production volumes in the 400cc segment will decline. Fewer units mean higher costs per unit, and that could eventually show up in the price lists of export markets. Not a dramatic overnight jump, but enough to slightly erode the previous price advantage of these motorcycles.
However, the outlook need not be entirely bleak. In Europe, the A2 license regulation continues to ensure stable demand in this displacement class. Southeast Asia is also showing growing interest. And the 400cc platforms are likely to continue being produced for export markets. The segment will not disappear, but the center of gravity is shifting.
350cc as the New Strategic Pivot Point
What is happening in India right now is more than a tax question. It is a paradigm shift. Tax efficiency has become just as important a factor there as performance or equipment. The 350cc class is becoming the new gravitational center of the market, while 400cc is falling behind structurally, at least on the home market.
Other manufacturers are feeling the pressure too. Hero MotoCorp and the Harley-Davidson partnership have barely gained a foothold in the 400cc segment. TVS Motor Company is also likely reconsidering its engine strategy for the planned Norton 400cc models in India.
For motorcycle buyers worldwide, this means: the era of remarkably affordable, India-produced mid-class motorcycles is not over. But it could become somewhat less affordable if the world’s largest motorcycle market permanently shifts its focus to 350cc.
