Auto sales to maintain momentum, driven by GST relief, EVs : SIAM

New Delhi: The domestic automotive industry will sustain its growth momentum in the second half of this fiscal year though sales will moderate on a high base, said Shenu Agarwal, president at industry body Society of Indian Automobile Manufacturers (SIAM).

Automobile sales across categories surged 20% on year in the six months ended September 30. Full-year growth will be fuelled by improved affordability following GST 2.0 reforms, strong financing support, resilient rural and urban markets, and festive demand, Agarwal told ET in his first interview since assuming charge in September.

“New launches, infrastructure spending, healthy freight movement and fleet replacement are also driving demand,” said Agarwal, also the managing director of truck and bus maker Ashok Leyland.


Alternate fuels and electric vehicles (EVs) helped drive a 31% surge in passenger vehicle sales in the July-September period. Agarwal said the EV ecosystem is maturing, with multiple offerings, improving charging network and supportive policy.

“Alternative fuel technologies are also gaining wider acceptance,” he said. “We expect demand for cleaner and more efficient vehicles to keep rising in the mid-term. These technologies will play an important role in India's sustainable mobility transition.” Recently notified CAFÉ III norms will attract more investments in new and sustainable technologies, he said.

Agarwal pointed to continued risks of inflationary pressures, higher interest rates and rising input costs on demand. The industry however remains “cautiously optimistic, we expect growth to stay positive,” he said.

Exports were largely strong last quarter despite geopolitical uncertainties, said Agarwal. Two-wheeler exports grew 28% to 1.65 million units in Q2, the highest ever for a second quarter. Three-wheeler exports grew 30% and commercial vehicle exports surged 72.5%.

Agarwal said passenger vehicle exports fell 5.2% to 229,000 units in the September quarter amid a high base and logistics constraints sparked by the West Asia crisis. “In the mid-term, we will keep watching geopolitical developments closely,” he said. “The broad-based growth in most segments shows the strength/ resilience of Indian automotive products in overseas markets.”

The entry-level car segment, meanwhile, is also staging a strong comeback after the cuts in goods and services tax (GST) from September 2025 led companies to drop prices, indicating a revival in consumption among first-time buyers.

Agarwal said the underlying demand fundamentals remain supportive and that the industry expects momentum to sustain going forward.

In H1 FY27, sales of entry-level passenger cars of up to 3.6 metres in length surged 86%. Among mass-market two-wheelers, entry-level scooters of up to 125 cc engines rose 17.5%, mopeds (75-100 cc) climbed 22%, and 110cc motorcycles grew 5.1%.

Overall, with vehicle penetration in the country still low, the headroom for expansion is significant, according to Agarwal. The automotive industry sees infrastructure investment across the country as the key enabler, alongside sustained economic growth, supportive policy for cleaner mobility, wider charging and alternate fuel networks, and easier access to finance.