I currently ride a 2014 Honda Unicorn 150. I’m looking to upgrade to a higher-cc bike that offers mileage around 40 km/L. My budget is ₹2 lakh. I need a pillion-friendly motorcycle suitable for family use. My daily commute is about 20 km. Please suggest options.

Since you have had a good experience with a Honda machine, you could stick with the brand and go with the Honda CB300F. The CB300F is light, comfortable, spacious and will return decent fuel economy. If you want to switch brands, the Bajaj Pulsar N250 and the Suzuki Gixxer 250 make for good upgrade options with their smooth engines and comfortable ergonomics. 

If you don't mind staying in the same displacement range while getting a significant performance bump, the KTM 160 Duke and Yamaha MT-15 warrant consideration. With their liquid-cooled engines and light weights, these two will give you the performance step up you want without sacrificing on mileage.