MSME Briefing Bureau

China controls the fastest-growing two-wheeler segment

India’s electric two-wheeler market is being presented as a domestic manufacturing success. The data seems impressive: 1.4 million units sold in FY2026, growing briskly. But beneath the headline figures lies an inconvenient reality. The fastest-expanding part of this market is not the high-speed, branded segment dominated by TVS, Bajaj, Ather and Ola. It is a largely invisible low-speed segment, growing more than 200 per cent year-on-year, relying almost entirely on CKD (Completely Knocked Down) kits—essentially disassembled vehicles imported from China—with Indians doing little more than assembly work. The consequence: India is outsourcing its fastest-growing EV manufacturing base while calling it growth.

To understand this divide is to understand why one segment builds an Indian manufacturing ecosystem and the other surrenders it. The government has inadvertently created a two-tier EV policy. High-speed vehicles face mandatory domestic content rules. Low-speed vehicles face none. The fastest-growing segment is the least regulated—and the least Indian.

Two markets, two supply chains, two outcomes

Official data from the Vahan dashboard shows approximately 1.28 million registered, high-speed electric two-wheelers on Indian roads in 2025, growing roughly 11 per cent year-on-year. These vehicles require type approval, insurance and registration.

Alongside this sits a parallel, largely untracked low-speed market. Analysis of Indian customs data by Naxatra Labs—reviewing 24 months of import records from November 2023 to October 2025 under Harmonised System (HS) code 8711.60—reveals that 22.35 million low-speed electric two-wheeler CKD kits were imported during this period. In comparison, just 25.05 million high-speed vehicles were registered. The unregistered, low-speed segment has now matched the entire registered market in volume and is growing nearly twenty times faster in percentage terms.

In October 2025 alone, 2.87 million CKD units landed at Indian ports—nearly double the 1.51 million high-speed vehicle registrations that month. The low-speed market is not peripheral. It is now the dominant segment.

Yet almost nobody in policy circles is discussing it.

Where the imports come from—and what stays behind

The import pattern is stark. 99.8 per cent of these CKD kits originate in China. More telling: 68 per cent come from a single city—Wuxi, Jiangsu Province—a clustering advantage China has built over years.

These kits arrive almost complete. A frame, motor, controller, battery, wiring—everything except tyres, mirrors and perhaps a seat. The Indian “manufacturer” then bolts components together, does basic welding and painting, and ships the vehicle to dealers. Assembly labour costs ₹3,000 to ₹6,000 per vehicle.

Your neighbour purchased a low-speed scooter last month for ₹70,000. The CKD kit landed at roughly ₹40,000 to ₹50,000. The ₹20,000 to ₹30,000 spread must cover assembly, transport, customs duties, GST, and margins for both the assembler and dealer.

Strip the accounting: 5 per cent GST on the ₹70,000 ex-showroom price equals ₹3,333. Dealer commission (typically 8–12 per cent) takes another ₹6,667. Add transport costs of ₹1,000 to ₹2,000. The assembler’s actual net profit margins shrink to ₹2,000 to ₹8,000 per unit—if operating efficiently. That is 3 to 12 per cent net margin on a ₹70,000 vehicle.

The critical point: almost all value creation—component design, motor manufacturing, electronics engineering, tooling—remains in Wuxi. India captures assembly labour and tax revenue. That is all.

The high-speed story: what regulation built

The contrast with high-speed vehicles is instructive. India’s high-speed OEMs—TVS, Bajaj, Ather, Hero MotoCorp’s Vida—operate under mandatory domestic content rules requiring 60 to 70 per cent of components by value to be manufactured domestically.

These rules forced action. Chassis makers in Gujarat, Maharashtra and Tamil Nadu invested in tooling. Frame manufacturers built capacity. Motor winding lines were established. Electronics assembly suppliers qualified. Wiring harness makers expanded. The supply chain deepened because regulation created demand.

Walk through any industrial estate in Gujarat’s automotive cluster and you will find these manufacturers. They exist. They have capability. They can deliver.

Yet for low-speed scooters—the segment growing 200 per cent annually—this entire Indian supply chain is bypassed. There is no mandate. There is no market signal. Assemblers have no commercial reason to buy from Gujarat when Wuxi kits are cheaper and simpler.

The opportunity cost: jobs, capabilities, revenue

Three categories of loss accumulate:

Revenue loss. A CKD kit subject to lower tariff rates than a manufactured frame or motor represents foregone customs duty. Across 22.35 million imported units, this translates to estimated annual revenue loss of ₹500 crores to ₹1,000 crores—depending on duty structure.

Manufacturing ecosystem foregone. Low-speed could have been an MSME boom. Instead, it remains an assembly operation. Each locally manufactured frame, motor or controller creates higher-wage jobs than assembly labour and builds institutional capability.

Strategic dependency. India has ceded the fastest-growing two-wheeler segment to Chinese suppliers. Design, innovation, cost reduction, supply chain resilience—all remain in China’s hands.

Why the SKODA parallel matters

A year ago, reporting revealed that Skoda automobiles imported entire cars as CKD kits, assembled them in India, and generated ₹11,000 crores in annual revenue—on which India captured only assembly margins and labour. A functioning car, imported as parts, reassembled locally, counted as “domestic manufacturing.”

India’s low-speed EV market is following the same playbook at a different scale. The segment is nearly as large as India’s entire registered high-speed EV market—and growing much faster. Yet policy treats it as a regulatory blind spot.

The simple fix: apply the same rule

The solution already exists. High-speed e-2Ws operate under domestic content mandates because regulation requires it. Low-speed vehicles do not because regulation permits the alternative.

A straightforward policy change—mandating 40 to 50 per cent domestic content for low-speed vehicles, verified through supply chain documentation—would shift demand to Indian manufacturers. MSMEs have demonstrated they can supply frames, motors and controllers at scales that make economic sense. They simply lack orders.

This does not require inventing new capabilities. It requires signalling demand.

Such a rule could be phased over 18 to 24 months. It would not force expensive localisation of battery cells or semiconductors. It would push for frames, chassis, motors, wiring harnesses, controllers and mechanical components—precisely where Indian MSMEs have existing or developable capacity.

The outcome: the fastest-growing vehicle segment builds a manufacturing ecosystem rather than importing one.

The choice in front of India

India’s EV two-wheeler market sits at a crossroads. One path leads to becoming an assembly hub for Chinese kits—low margins, low jobs, low capabilities. The other path uses this boom to build a deeper manufacturing base—the same ecosystem that high-speed regulation has already created.

The data is unambiguous. Low-speed now dominates by volume and is growing fastest. If policy continues to treat it as a peripheral, unregulated niche, China’s manufacturers remain the primary beneficiary. If India sets enforceable domestic content rules—applying the same logic that works for high-speed—this segment becomes a launchpad for Indian MSMEs to move up the value chain.

The question for policymakers is not whether India can manufacture these components. It already does—for the high-speed segment. The question is whether it will allow the fastest-growing part of the EV boom to remain an import-driven assembly game, or use it to finally build a coherent manufacturing strategy across the entire two-wheeler segment.

Time to decide.

A question for Indian manufacturers

This article documents a structural problem: India’s fastest-growing EV segment is bypassing its manufacturing base. But data and analysis alone do not drive policy change. Industry demand does.

If you are a chassis manufacturer, motor supplier, electronics assembler, or wiring harness maker in India’s automotive MSME sector—and you have experienced lost orders, suppressed demand, or direct competition from low-cost Chinese CKD imports in the electric two-wheeler space—we want to hear from you.

Specifically:

• How much capacity do you have available for low-speed EV components (frames, motors, controllers, wiring, assemblies)?
• Have you approached low-speed assemblers? If so, what was the response?
• What is the price gap between your offering and imported CKD alternatives?
• What would make entry into this segment viable for you—volume commitments, government support, tariff protection, domestic content mandates?

We are collecting evidence of industry impact. MSMEBriefing is documenting manufacturer cases and aggregating what India’s automotive MSMEs demand from government: higher customs duty on CKD imports, countervailing duty (CVD) on Chinese kits, domestic content mandates, or import restrictions.

If your association—whether CII, SIAM, state MSME chambers, or sector-specific groups—has data or a position on this issue, we want to feature it.

Write to us. Share your experience. Help build the industry case. When policymakers see not an article, but a chorus of manufacturers saying “We can do this, we want this market, and we’re losing it,” that is when change becomes possible.

Contact: [connect@msmebriefing.com]

Sources and data notes

• Low-speed CKD imports: 22.35 million units (Nov 2023–Oct 2025), 99.8 per cent from China, 68 per cent from Wuxi—Naxatra Labs customs analysis (HS 8711.60), cited by EVreporter.
• October 2025 data: 2.87 million CKD units landed vs 1.51 million high-speed registrations—Naxatra Labs, EVreporter.
• High-speed registered vehicles: ~1.28 million units FY2026, ~11% YoY—Vahan dashboard, Autocar India, Economic Times.
• High-speed segment FY2026 sales: 1.4 million units—Autocar India analysis.
• High-speed e-2W domestic content mandate: 60–70 per cent—industry standards, TVS/Bajaj/Ather operational data.
• Low-speed scooter pricing and CKD costs: Ground observation, retail surveys, dealer guides.
• Skoda revenue and CKD import model: Media reporting, automotive trade publications.
• GST structure on two-wheelers (5 per cent): Shriram Finance GST guidance, HSN 8711.