Bajaj Auto is preparing a fresh wave of products under its KTM and Triumph brands with smaller engine displacements, as it looks to take advantage of the cut in Goods and Services Tax (GST) on mid-capacity motorcycles.
The GST rate on two-wheelers with engines up to 350cc was reduced by 10 percentage points to 18 percent, effective September 22, 2025. Motorcycles with engines above 350cc, however, attract the highest tax rate of 40 percent. The change has significantly altered the competitive landscape in the mid-capacity motorcycle segment.
While the revised tax structure has benefited market leader Royal Enfield—over 85 percent of whose sales come from models with 350cc engines—it has placed several premium offerings from rival manufacturers at a disadvantage.
Models from KTM, Triumph and Harley-Davidson, manufactured in India by Bajaj Auto and Hero MotoCorp, fall just above the threshold and therefore remain in the highest tax bracket.
Bajaj Auto’s KTM portfolio, including the 390 Duke, RC 390, 390 Adventure and 390 Enduro, as well as the entire Triumph range comprising the Thruxton, Speed and Scrambler, are powered by 400cc engines. Despite being only around 50cc larger than Royal Enfield’s 350cc models, these motorcycles attract more than double the GST rate.
Bajaj Auto maintained the prices by absorbing the increase. It has been working closely with its global partners to realign its product portfolio. KTM is now effectively under Bajaj’s control following the Pune-based company’s move to buy shares of the Austrian company.
“The world over, demand in two-wheelers is moving towards the higher cubic capacity bikes such as 400cc and above. But in India we are putting sin tax on it,” Executive director, Bajaj Auto said in an interaction with Moneycontrol on January 14.
“The market will see a number of launches from us in the coming months,” he added.
Before the tax disadvantage, KTM and Triumph together sold more than 30,000 units during the September quarter, registering an all-time high growth of 30 percent.
Bajaj is also sharpening its competitive positioning across segments. With the launch of the KTM Duke 160, it is targeting the large and lucrative 150cc super-premium segment. With the combination of KTM Adventure and Triumph Scrambler, it is challenging leadership in the fast-growing ‘adventure’ segment.
The GST impact is not limited to partner brands. Bajaj’s own models such as the Pulsar NS400z and Dominar 400 also fall under the 40 percent GST slab and are expected to undergo similar engine modifications to qualify for the lower tax rate.
Industry observers note that reducing engine displacement by 25cc to 50cc is likely to result in lower peak power output.
Given that performance is a key brand attribute for KTM and Triumph, Bajaj faces the challenge of preserving performance and rider appeal while reengineering engines to unlock the GST benefit.
The moves underscore how taxation policy is increasingly shaping product strategy in India’s premium motorcycle market, potentially redefining the popular mid-capacity segment around the 350cc mark.
