NEW DELHI: Establishing a bilateral trade agreement is essential not only for India but also for the US, as it aligns with Donald Trump’s aim to enhance production and exports from America. A comprehensive reduction in duties would allow manufacturers of automobiles, bourbon, and mobile devices to import products into India from the most competitive regions, likely including China or Southeast Asia, rather than relying on American factories.
Neither Harley Davidson, a brand cherished by American presidents, nor Tesla, led by Trump’s advisor Elon Musk, manufactures their vehicles domestically.
Harley imports its motorcycles from its manufacturing facilities in Thailand, while Tesla, which is preparing to enter the Indian market, is expected to export its electric vehicles from Germany after being advised not to source them from China.
Companies often prefer alternative manufacturing locations due to geographic advantages that reduce freight costs or enable economies of scale. Furthermore, some are leveraging India’s existing free trade agreements to bring in products with zero duty.
Despite the ongoing discussions, Harley only produces the 440cc model in India through a partnership with Hero Moto. “The company has a substantial production base in Thailand that it relies on to import motorcycles into India. Besides the 440cc model manufactured locally, larger models such as the Pan America, Nightster, Street Glide, and Fat Bob are brought in from Thailand,” stated an analyst with expertise in international trade.
“Even if India eliminates the duties on motorcycle imports from the US entirely, Harley will continue to find it advantageous to source from Thailand as the proximity reduces freight expenses and shortens shipping times,” another analyst noted.
A bilateral trade agreement, for which Commerce and Industry Minister Piyush Goyal is currently in Washington, could offer tariff benefits for both India and the US, enabling factories and farmers in both countries to export directly.
The government has demonstrated its intent for lower tariffs by reducing duties on imported motorcycles and bourbon. Although this reduction applied to all imports, it was in response to Trump’s criticisms of India’s “high tariffs,” but did not result in substantial benefits for American factories.
Out of $2.6 million worth of bourbon whisky imports, only $780,000 originated directly from the US, with most products being sourced from other nations, some of which serve as bottling hubs.