India's auto sector set for strong growth in H2 FY26
What's the story
India's automobile sector is expected to witness a major boost in the second half of FY26. The anticipated growth is due to a combination of policy support, rural revival, and new launches. Brokerages are betting on repo and CRR rate cuts, along with a possible GST rate cut, as key drivers for this demand surge, especially in two-wheelers and small passenger vehicles (PVs).
Market leaders
Two-wheelers to see maximum demand surge
B&K Securities has predicted that two-wheelers will be the biggest beneficiaries of this demand surge. The brokerage firm cited tax relief in the recent budget, improving rural sentiments, and a range of premium electric two-wheelers as factors that would drive sales. Major players like Royal Enfield and TVS Motor are expected to capitalize on this trend.
Sector growth
Commercial vehicles also expected to benefit
The commercial vehicle (CV) segment is also likely to benefit from the demand surge. The expected GST rate cut, along with improving rural sentiments, is likely to boost demand for CVs. This comes as a major relief for manufacturers in the segment who have been facing various economic and policy-related challenges.
Factors influencing growth
Policy support and rural revival to drive demand
The anticipated growth in India's auto sector is not just due to new launches but also policy support and rural revival. The possible GST rate cut is seen as a major factor that could provide much-needed relief to consumers, thereby boosting demand across different segments of the automobile market. Rural revival, on the other hand, is expected to improve purchasing power in these areas, further driving demand for vehicles.