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India's retail vehicle sales jumped 14% to more than 2 million in March on festival demand and buying ahead of implementation of new fuel emission norms, the country's Federation of Automobile Dealers Associations (FADA) said on Tuesday.

But following March's surge, the financial year that began at the start of this month is expected to see growth tapering to a low single-digit percentage, the association said, citing a high comparison base, inflationary pressures, routine price hikes and regulatory changes.

Auto sales are among the key indicators used to assess India's private consumption, as it has a weighting of more than 50% in calculating economic growth.

The three-wheeler segment of the vehicle market achieved record numbers in March, FADA said, with retail sales surging 69% year-on-year, surpassing the previous high hit in March 2020.

Sales of passenger vehicles and two-wheelers advanced 14% and 12% respectively, while commercial vehicle sales grew 10.3%.

Except for tractors, which grew nearly 4%, all categories saw double-digit growth for the month, FADA said. The new emission norms, implemented on April 1, require automakers to fit their vehicles with a device to check emissions, leading to extra costs.

The industry body also warned that the possibility of an El Niño weather pattern later this year could lead to poor monsoons, hampering rural India's growth potential.

The end of March saw unseasonable rains and hailstorms in north and central India which have destroyed key crops and delayed harvesting, which will have a negative impact on rural vehicle sales, said FADA.

Domestic sales at Hero, India's largest motorbike maker by volume, grew 21%, while TVS Motor Co Ltd posted a 22.5% rise in sales.

Mahindra and Mahindra Ltd on Monday reported a 30% jump in its passenger vehicle sales, while Ashok Leyland saw a 19% jump for March.