US President Donald Trump, right, speaks with Prime Minister Narendra Modi during a press briefing in the East Room of the White House, Washington, on February 13, 2025. (AP)
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.
Donald Trump has issued a warning regarding reciprocal tariffs, which would result in the US imposing the same tariff rates as those levied by other countries on American exports.
Harley-Davidson currently partners with Hero MotoCorp in India, with the X 440 being their first collaboratively designed model.
US President Donald Trump has advocated for reciprocal tariffs on countries, corresponding to the rates at which they impose tariffs on American goods. During discussions with Prime Minister Narendra Modi, Trump criticized India’s high tariffs on US-manufactured Harley-Davidson motorcycles.
In his second term, Trump has reiterated the notion of reciprocal tariffs, asserting that this aligns with his vision of equitable trade practices. He previously imposed a 25% tariff on specific imports from Canada and Mexico, though that initiative was temporarily paused until the end of February. He has also targeted regions like the European Union, China, and India. “Currently, we are a reciprocal nation… Whatever tariffs India charges us, we will reciprocate, and I believe this is only fair,” he stated. “I recall when Harley Davidson struggled to sell their motorcycles in India due to steep taxes and tariffs, which led them to establish local manufacturing to circumvent these costs. Others might consider similar strategies in their dealings with us.”
While both India and the US maintain significant trade relations, Trump’s tariff threats do not single out any specific country. By promoting domestic production and leveraging his presidential campaign on the promise of creating more American jobs, Trump signals his desire for production capacities to develop or increase in the United States rather than relying heavily on imports.
What happened to Harley-Davidson in India?
Harley-Davidson entered India in 2009, launching its first dealership in 2010. Known as a premium brand in the US, Harley initially imported models such as Sportster, Dyna, VRSC, Softail, and CVO. However, as the years went by, the company began to locally assemble certain models, including the Street 500 and 750 in Bawal, Haryana.
Despite the vast two-wheeler market in India, penetrating the premium segment posed significant challenges. In September 2020, Harley-Davidson announced its exit, citing weak demand and disappointing sales figures. However, it wasn’t a complete exit; the American company partnered with Hero MotoCorp in October 2020, designing a framework for Hero to enable sales and servicing of Harley’s motorcycles. By 2023, their first joint project, the Harley-Davidson X440, launched at a price of ₹2.30 lakh (ex-showroom).
In December of the previous year, US President Donald Trump mentioned that India imposes “high” tariffs, emphasizing his plan to enforce reciprocal tariffs in response to the taxes New Delhi places on certain American imports. With Trump back in the White House, the prospect of tariffs casts a shadow over India. The US ranks as India’s largest trading partner, with India enjoying a trade surplus. In 2023-24, India’s exports amounted to $77.51 billion compared to $42.2 billion in imports during the last fiscal year. From April to December of this fiscal year, India’s exports to the US increased by 5.57% to approximately $60 billion, while imports rose by about 2% to $33.4 billion. Historically, the US has highlighted concerns over high import duties on Harley Davidson bikes and limited access to medical devices, equipment, and dairy products in India.
Following Trump’s election victory last November, India initiated a comprehensive sector-wise assessment, devising multiple scenarios to brace for potential tariff hikes on exports to the US under Trump’s administration, as reported by ET in December.
India’s prospects under the Trump administration Trump’s memorandum titled “America First Trade Policy,” released on his first day in office, could present an opportunity for India. The memo instructed the United States Trade Representative (USTR) to pinpoint countries to engage in trade agreements, either bilaterally or within specific sectors, to enhance export access for various American entities. The Indian government is currently reviewing the memo. “We are analyzing the memo and assessing its implications before creating any strategy… At this stage, based on an initial reading, I don’t see anything overly concerning. Our evaluations have yet to materialize into action,” officials informed PTI. The government is also waiting for the official confirmation of the key trade positions in the US.
Indian and US diplomats aim to organize a meeting between Prime Minister Narendra Modi and Trump in Washington in February, according to sources who spoke to Reuters. However, the likelihood of a February meeting remains uncertain. There is a possibility for a bilateral discussion later in the year, especially when the Quad leaders—comprising India, Australia, Japan, and the US—reconvene at an annual summit hosted by India.
Indian officials are contemplating a limited trade agreement with the US within one scenario, according to Bloomberg sources. The proposed plan would involve lowering certain “most-favored nation” tariffs imposed on countries with which India lacks a bilateral trade deal.
Last month, Reuters reported that India is gearing up to propose tariff reductions on certain agricultural and other goods primarily imported from the US, aiming for a more extensive trade and investment deal once Trump assumes office. To address Trump’s proposal of a “reciprocal tax” on Indian goods due to high tariffs, some officials from the Indian commerce ministry are contemplating reductions on specific items like pork, as revealed by a senior government source. Currently, India enforces a 45% import tariff on pork, predominantly sourced from the US. Additionally, tariffs could see reductions on premium medical devices such as pacemakers and luxury motorcycles like Harley Davidson, according to an official with direct knowledge of trade matters, who cited existing tariffs ranging from 25% to 60% on those products. To alleviate Trump’s concerns regarding the trade deficit, officials have also suggested increasing purchases of LNG and defense equipment from the US, as reported by Reuters.
“This presents an opportunity,” noted Arvind Virmani, a government advisor and member of the state-run policy think tank NITI Aayog, speaking to Reuters. “Both the US and India would benefit from shifting more critical and sensitive manufacturing to India rather than relying on China,” he added, suggesting a more ambitious “preferential trade cum investment deal” than the previously discussed mini-trade agreement, which could be mutually beneficial for both nations.
Restarting India-US discussions from a prior standpoint During Trump’s initial term, a proposed mini-trade agreement aimed at addressing trade discrepancies and enhancing trade relations through limited deals stalled due to disagreements over tariffs, access to markets, and intellectual property. The Biden administration similarly is not keen on a free trade agreement. India now seeks a broader agreement, as reported by Reuters, offering substantial concessions such as production-linked incentives for logistics companies and support for logistics sector.
Kenneth I. Juster, a distinguished fellow at the Council on Foreign Relations, and Mark Linscott, a senior advisor at the U.S.-India Strategic Partnership Forum and the Asia Group, expressed in ‘Foreign Policy’ that this time around, Modi and Trump should take advantage of the opportunity to forge a significant bilateral agreement.
They noted that although US-India economic relations have consistently advanced throughout the 21st century, they have not met expectations in comparison to the remarkable progress made in nearly every other aspect of the bilateral partnership. “However, there are grounds for optimism. Trump enjoys negotiating deals and is eager to enhance the US economy. His tariffs may serve as leverage to unlock foreign markets for US companies, creating jobs related to exports and reducing the bilateral trade deficit. Modi is a strategic thinker focused on fostering India’s economy and expanding its international role,” they stated.
“Both the United States and India aim to strengthen their economic influence in the Indo-Pacific region and mitigate China’s economic dominance. The moment is opportune, and the incentives exist for both leaders to overcome challenges and finalize a major agreement.” (With contributions from agencies)
Donald L Jake Lozier, aged 63, of Taylorville, passed away on Tuesday, December 3, 2024, at Taylorville Memorial Hospital. He was born on January 15, 1961, in Trenton, New Jersey, to John H. and Maragret E. (Titsworth) Lozier. On July 25, 1987, he wed Ruth Ann Yasinski in Burnsville, North Carolina. A skilled craftsman, Donald and his wife ran a drywall business together in North Carolina. He was a passionate Harley Davidson fan and a devoted football enthusiast. His lively personality and sharp humor will be fondly remembered.
He is survived by his wife: Ruth Ann Lozier of Taylorville; daughters: Faith Ann Lozier from Taylorville and Ashlyn Nykol Hrabak of Assumption; grandchildren: Anna Elizabeth Hrabak, Rebel Grace Hrabak, Lydia Renee Durbin, and James Anthony Durbin; siblings: Betty Sue Grubb (Greg) of Lexington, North Carolina, Lois Desio (David) of Rochester, New York, and Charles Howard Lozier from Lexington, North Carolina; and numerous nieces and nephews. He was preceded in death by his parents and siblings: John Henry Lozier Jr., Rhonda Georgette Lozier, and Mandy Hulin.
Mr. Lozier will be cremated, and the family plans to hold a memorial service at 11 a.m. on Saturday, December 14, at Crossroads Apostolic Ministries in Taylorville.
Memorial contributions may be made to the Lozier Family. McClure Funeral Home and Cremation Services in Taylorville is assisting the family with the arrangements.
