Mon Jan 19 07:00:00 UTC 2026: ### Bajaj Auto Responds to GST Cut with Strategic Engine Adjustments for KTM and Triumph

The Story:

Bajaj Auto is proactively adapting its product strategy for KTM and Triumph motorcycles in response to the Goods and Services Tax (GST) rate cut on two-wheelers with engines up to 350cc, effective September 22, 2025. The company is preparing to launch new models with smaller engine displacements to take advantage of the lower 18 percent GST rate, compared to the 40 percent rate for motorcycles above 350cc. This move aims to level the playing field against competitors like Royal Enfield, which predominantly sells models in the 350cc segment.

Key Points:

  • The GST rate on two-wheelers up to 350cc was reduced to 18 percent, effective September 22, 2025.
  • Motorcycles above 350cc attract a 40 percent GST rate.
  • Bajaj Auto’s KTM and Triumph models, currently powered by 400cc engines, are subject to the higher tax rate.
  • The company is working to realign its product portfolio with smaller engine displacements to qualify for the lower GST rate.
  • Prior to the tax disadvantage, KTM and Triumph sales grew by 30 percent, selling more than 30,000 units in the September quarter.
  • Bajaj Auto is also launching the KTM Duke 160 to target the 150cc super-premium segment.
  • Modifying engines may result in lower peak power output, posing a challenge to maintaining performance.

Critical Analysis:

The GST policy change has created a significant distortion in the premium motorcycle market, favoring manufacturers with sub-350cc models. Bajaj Auto’s response reflects a strategic adaptation to this policy, prioritizing market competitiveness over maintaining current engine displacements. The company’s ability to navigate this challenge will depend on its success in re-engineering engines without significantly compromising performance, a key attribute of the KTM and Triumph brands. The executive director’s sentiment reflects the industry’s overall frustration with high taxes on higher cubic capacity bikes.

Key Takeaways:

  • Taxation policies are significantly influencing product strategy in the Indian motorcycle market.
  • Bajaj Auto is strategically adjusting its product portfolio to capitalize on GST benefits.
  • Balancing performance and cost-effectiveness will be crucial for Bajaj Auto’s success.
  • The 350cc segment is likely to become increasingly competitive due to the GST structure.
  • The industry sees the current taxation policy as a disincentive to the growth of higher cubic capacity bikes.

Impact Analysis:

This strategic shift by Bajaj Auto could redefine the mid-capacity motorcycle segment in India. By focusing on models under 350cc, Bajaj Auto aims to enhance its market share and competitiveness. However, the potential reduction in engine power could impact the perception and desirability of KTM and Triumph motorcycles. The long-term success of this strategy will depend on Bajaj Auto’s ability to innovate and deliver compelling products within the new tax framework. This may pressure other manufacturers to follow suit, potentially leading to a proliferation of models specifically designed to fall under the 350cc threshold, regardless of their technical suitability for that displacement.

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