The draft amendments to the Central Motor Vehicle Rules (1989), released by the Ministry of Road Transport and Highways (MoRTH) on June 27, 2025, aim to enhance road safety. They require all two-wheelers to be fitted with ABS and mandate the supply of two protective helmets with each purchase. While the regulations are expected to enhance rider protection, industry experts warn of potential headwinds for the sub-125cc category — a price-sensitive segment that has not yet regained its pre-pandemic sales volumes (models above 125cc are already equipped with ABS).
An estimated price increase of 3–5% across models under 125cc, as a result of mandatory ABS, may further strain demand in the entry-level category,” ICRA noted. Models above 125cc already come equipped with ABS under current regulations and are unlikely to be affected.
Affordability at the core of demand slump
Over the past five to six years, two-wheeler prices have surged by nearly 45–50% due to regulatory changes such as BS-VI compliance, enhanced safety features, insurance reforms, and rising raw material costs. Meanwhile, household income growth has lagged, weakening affordability—particularly in rural and semi-urban markets where entry-level models dominate.
Fuel price hikes and pandemic-driven disruptions have further compounded the pressure on consumer wallets. As a result, two-wheeler sales plummeted between FY2019 and FY2022, and although a gradual recovery is underway, the market has yet to return to its FY2019 peak of 21.2 million units.
Safety still a priority
While the number of road accidents has remained relatively stable over the past decade, the fatality rate—especially among two-wheeler riders—has increased. The data on road accidents and fatalities on national highways by various categories of road users shows that two-wheeler accidents have had higher fatality rates.
Despite the economic concerns, MoRTH maintains that the move is vital for reducing fatalities. India’s fatality rate in road accidents remains high, especially among two-wheeler users. ABS — which prevents wheel lock during sudden braking — is expected to significantly reduce accident severity, particularly on wet or uneven roads.
The ministry’s latest safety push is part of a broader strategy to curb road fatalities by enforcing stricter safety norms and encouraging responsible vehicle usage.
However, as the automotive industry braces for another cost-driven shift, stakeholders fear that without targeted incentives or phased implementation, the new mandate might disproportionately affect the segment most vulnerable to economic fluctuations.
