Policy

US squeezes India to set zero import duty on Harleys

Amiti Sen New Delhi | Updated on May 30, 2018

US trade office to raise demand at upcoming meeting with Suresh Prabhu

The Donald Trump administration has in recent months been firing away on all cylinders to get India to lower import levies on Harley-Davidsons. Succumbing to the deafening roar of US criticism, the Modi government complied in February. But now, New Delhi is under pressure to waive import duty on America’s iconic motorbike in its entirety.

“The Trump regime believes the import tariff reduction on motorbikes that India implemented in February is not enough. The US Trade Representative’s (USTR) office wants the demand for zero import duties on the Harley-Davidson to be part of the agenda of the meeting between the USTR and Commerce and Industry Minister Suresh Prabhu,” a government official told BusinessLine.

Prabhu will meet USTR Robert Lighthizer in Washington in two weeks.

But his ministry is undecided on how to respond to the demand. Tariff elimination will be difficult, given the adverse commercial and political fallout.

“Import tariffs are high on motorcycles as it is felt that our domestic industry needs to be protected, and manufacturing and job creation within the country needs to be encouraged,” the official said. “If duties are to be eliminated for Harley-Davidson, it has to be done for all high-end motorcycles imported from all countries. This could deal a severe blow to our domestic industry.”

In February, India reduced import duties on fully-imported motorcycles (above 800 cc) from 75 per cent to 50 per cent. This was done following US President Donald Trump’s sustained campaign on how “unjust” India’s import duties on Harley-Davidsons were.

However, India’s gesture did not placate Trump, who, instead, only criticised the country. Trump told a gathering of Governors of all the US States: “Now, the Prime Minister (of India), who I think is a fantastic man, called me the other day and said we are lowering (import duties on motorbikes) to 50 per cent. I said okay, but so far we’re getting nothing. He (Modi) gets 50 (per cent), and they think... they’re doing us a favour. That’s not a favour.”

New Delhi is obviously disappointed with Trump’s reaction. “It was a big decision for India to bring down import duties, which led to a reduction in the prices of Harley-Davidson in the country. It is unfortunate that instead of appreciating the move, Washington is seeking more,” the official said.

In March this year, Harley-Davidson announced a reduction in the prices of its Touring and CVO models.  The reduction ranged between ₹2.62 and ₹3.73 lakh.

Published on May 29, 2018

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