Rajiv Bajaj Says GST Cut Is A Tactical Hit But A Strategic Miss: Here Is Why

When the government announced a reduction in GST on two-wheelers, many in the industry welcomed the move. The lower tax slab was seen as a way to bring down entry prices, make commuting more affordable, and boost demand.

Yet Rajiv Bajaj, Managing Director of Bajaj Auto, chose to look beyond the immediate benefits. His take was that the GST reduction was a tactical hit but a strategic miss, and his reasoning centred on the exclusion of motorcycles above 350 cc.

The essence of his argument lies in the structure of the market. India’s two-wheeler industry is dominated by commuter bikes, typically under 350 cc, which account for the bulk of volumes. These models did gain from the GST relief.

But the premium motorcycle segment, which is slowly developing and holds potential for brand positioning and exports, has been left out. By excluding larger capacity motorcycles, policymakers have effectively sent a signal that the focus is only on the bottom of the pyramid.

For Bajaj, whose company straddles both ends of the spectrum, this creates an imbalance. On one side, commuter bikes benefit and can grow further. On the other, premium models remain weighed down by higher taxes, limiting their accessibility to aspirational buyers. In his view, this narrow approach risks stunting the long-term evolution of the industry into one that can balance both high-volume and high-value products.

There is also the question of product planning. If manufacturers see no incentive in the larger capacity segment, they may choose to divert resources away from it. That could mean fewer launches, slower innovation, and less focus on building a strong domestic premium market.

For customers, the result would be fewer choices and continued higher prices for aspirational products. At a time when companies like Bajaj, TVS, and Royal Enfield are investing in higher displacement models to compete globally, such taxation policy seems misaligned with strategic industry growth.

The exclusion also creates an uneven playing field. Buyers of commuter bikes enjoy the relief while buyers of larger motorcycles effectively pay a premium that feels punitive. This distinction does not necessarily reflect usage or safety but only engine size, which raises the question of whether taxation should be more nuanced.

Bajaj’s comments underline the tension between immediate political goals and long-term industrial vision. Cutting GST on small bikes wins applause because it directly impacts a large base of consumers.

But building a strong two-wheeler industry for the future requires fostering the entire ecosystem, including premium segments. Larger motorcycles bring with them brand prestige, higher margins, and potential export advantages, which in turn strengthen the overall industry.

In framing the GST cut as tactical rather than strategic, Bajaj is highlighting the difference between short-term relief and long-term growth. The move may indeed push sales in the commuter category, but it does little to encourage companies to expand their premium offerings. In the long run, this could mean missed opportunities for creating a robust high-end motorcycle market that can compete internationally.