India’s GST Council has introduced one of the biggest tax reforms since GST was rolled out in 2017. The revised structure, in effect from 22 September 2025, has reduced the number of slabs and adjusted tax rates across multiple sectors, including the automobile industry. For Royal Enfield, one of the largest players in the mid-size motorcycle segment, this means both opportunities and challenges.
GST Changes: A Split by Engine Capacity
Bikes Up to 350 cc – Now at 18% GST
Motorcycles with engines below or equal to 350 cc will now be taxed at 18%, down from the earlier 28%. This directly benefits models like:
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Hunter 350
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Classic 350
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Meteor 350
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Bullet
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Goan Classic
These motorcycles contribute close to 87% of Royal Enfield’s total sales (as of August 2025). With the GST reduction, these bikes will now be more affordable for Indian buyers, boosting Royal Enfield’s mass-market appeal.
Quick Summary
| Category | Models | Engine Size | Old GST | New GST | Effect |
|---|---|---|---|---|---|
| Popular Commuter Bikes | Hunter 350, Classic 350, Meteor, Bullet, Goan Classic | Up to 350 cc | 28% | 18% | Prices reduced |
| Mid-Segment Adventure Bikes | Himalayan 450, Guerrilla 450, Scram 440 | 440-450 cc | 28% | 40% | Prices increased |
| Premium Range | Interceptor 650, Continental GT 650, Super Meteor, Shotgun, Interceptor Bear | 650 cc | 28% | 40% | Prices increased sharply |
Bikes Above 350 cc – Moved to 40% GST
On the other side, motorcycles over 350 cc have been placed under a new 40% tax bracket. Earlier, they attracted 28% GST plus an additional cess, which together worked out lower than the new 40%. This hike impacts:
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Himalayan 450
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Guerrilla 450
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Scram 440
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Interceptor 650, Continental GT 650, Super Meteor, Shotgun, and Interceptor Bear
These models were gaining popularity in premium and adventure categories, but now face significant price increases.
How Prices Are Expected to Change
Price Reduction for 350 cc Models
For commuter-friendly motorcycles, customers can expect noticeable savings. For example:
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Royal Enfield Classic 350: Price may fall by around ₹19,000.
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Hunter 350: Could see a reduction of nearly ₹15,000.
These cuts make Royal Enfield’s entry and mid-level motorcycles more competitive against rivals in the commuter and touring space.
Price Hike for Larger Bikes
In contrast, motorcycles in the 440-650 cc range are expected to cost between ₹15,000-₹30,000 more, depending on the model and variant. This could affect aspirational buyers who were considering upgrading to premium Royal Enfield models.
Industry Reactions and Royal Enfield’s Stand
Royal Enfield had earlier urged the government to maintain a uniform GST rate across all motorcycles. The company argued that:
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The over-350 cc category forms just 1% of India’s two-wheeler market.
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Treating them as luxury items adds minimal revenue but risks stunting growth.
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Larger bikes are not indulgences but practical alternatives to cars, often offering better fuel economy and lower running costs.
Company leaders also warned that higher taxation could slow down investments in India’s premium two-wheeler industry and reduce its chances of competing globally.
Broader Impact on the Market
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Positive for mass buyers: Lower prices for 350 cc bikes will likely boost sales volume in both rural and urban markets.
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Negative for premium growth: The higher tax could slow momentum in adventure and premium motorcycles, a segment where Royal Enfield had been building strong demand with the Himalayan and 650 cc range.
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Market shift: Competitors in the premium segment, including Bajaj, Triumph, and Harley-Davidson, will face similar challenges, potentially reshaping India’s motorcycle market balance.
FAQ – Royal Enfield GST Rate Update
Q1. From when are the new GST rates applicable?
A. They are effective from 22 September 2025.
Q2. Which Royal Enfield bikes are now cheaper?
A. All motorcycles with engines ≤350 cc Hunter 350, Classic 350, Meteor, Goan Classic, and Bullet.
Q3. Which bikes are costlier now?
A. Himalayan, Guerrilla, Scram, and the entire 650 cc range (Interceptor, GT, Super Meteor, Shotgun, Interceptor Bear).
Q4. Why did the government make this distinction?
A. To encourage affordable commuter motorcycles and classify larger-capacity bikes as higher-tax luxury or non-essential products.
Q5. What is Royal Enfield’s concern with the new rule?
A. They believe that higher taxation on bigger bikes will discourage investment and shrink a segment critical for India’s global two-wheeler leadership.
Conclusion
The GST rate overhaul has created a two-speed market for Royal Enfield. While the brand’s backbone 350 cc motorcycles will become more affordable and drive sales, its higher-end offerings now face a steep tax burden. The long-term impact will depend on how consumers respond to price shifts and whether Royal Enfield can balance volume sales with premium aspirations.
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