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Royal Enfield Makes Big Decision Regarding GST 2.0 Tax Structure
Under the new GST 2.0 tax structure, motorcycles exceeding the 350cc category will be taxed at a rate of 40% GST. As one of India's leading premium bike manufacturers, Royal Enfield is directly impacted. However, the Chennai-based manufacturer has confirmed it will not downsize its engines, but instead continue developing higher-capacity models for domestic and global markets.
Royal Enfield Makes Big Decision
Brands like Bajaj, KTM and Triumph are planning to downsize their engines to come under the new GST 2.0 tax slab. But Royal Enfield won't be taking that approach, and they will stick with their original engines. They will continue to follow their approach of minimum platforms and maximum number of models.
According to the new GST 2.0 norms, bikes with an engine capacity below 350cc will be taxed at 18% GST, while those with an engine capacity above 350cc will pay the higher 40% GST tax. This will add more pressure to the manufacturers selling bikes above 350cc.
Bajaj Auto has openly stated that every bike should be taxed similarly. Bajaj and its partners KTM and Triumph Motorcycles have planned to downsize their engines and build new 250cc to 350cc bikes that fall under the 18% tax slab.
Royal Enfield bikes, such as the Himalayan 450, Continental GT, Super Meteor 650 and the Interceptor 650, also fall into the higher tax slab. But the company has clearly stated that it won't be doing any downsizing. They are working on plans to convince the government to reduce the taxes for bikes that fall in the 40% bracket.
Downsizing the engine could weaken Royal Enfield's global ambitions, especially as the company is developing a new 750cc platform for the Himalayan and Continental GT. Their 450cc and 650cc motorcycles enjoy strong demand overseas. The Brand has other plans, like outsourcing engines.
According to Autocar's report, Royal Enfield is planning a 250cc bike with its engine sourced from CFMoto. This bike will also be Royal Enfield's most fuel-efficient bike and will be priced under the Hunter 350. Currently, the Royal Enfield Hunter 350 is available in India, priced at 1.37 lakhs (ex-showroom).
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