Amid an evolving Covid-19 situation rating agency ICRA expects a 12-14% Y-o-Y growth in two-wheeler volumes in FY2022. According to ICRA, healthy rabi production, the timely arrival of the monsoons, a hike in minimum support prices for Kharif crops and other income support schemes by the Government are likely to aid the two-wheeler offtake in the festive season. Even as the pace of domestic demand recovery remains uncertain, the steady growth in two-wheeler exports is encouraging and is expected to support industry volumes in FY2022.

Taking a cue from the high-frequency indicators of economic recovery following the second wave, ICRA had moderated its GDP growth forecast in June 2021 to 8.5 per cent Y-o-Y for FY2022 (previously estimated at 10.5 per cent). While uncertainty continues to persist regarding a possible third wave, the rating firm continues to maintain a Stable outlook for the two-wheeler industry. It is expected that a low base, healthy rural cash flows, and continued preference for personal mobility would support 2W demand in the festive season. Nevertheless, the same would be closely linked to the pace of the vaccination drive and demand disruption due to the resurgence of Covid-19; uneven monsoons or volatilities in exports could pose downside risks to the current estimates.