Exciting news for motorcycle enthusiasts!
In a strategic move benefiting the iconic American brand Harley-Davidson, India has announced a reduction in import duties on premium motorcycles.
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This change is set to make Harley-Davidson motorcycles more attainable for riders throughout the country.
The longstanding tariff on Harley-Davidson has been a contentious issue between India and the United States.
So, what prompted India to lower the import duties on these bikes now? What effects will this have on sales and the market?
Let’s dive in:
Reasons for the Reduced Prices of Harley-Davidson in India
The import duty on motorcycles with engine sizes up to 1,600 cc, brought in as completely built-up (CBU) units, has decreased from 50% to 40%.
For larger motorcycles exceeding 1,600 cc, the reductions are even more significant.
The tariff on semi-knocked down (SKD) kits has been reduced from 25% to 20%, while completely knocked down (CKD) units will now incur a tax of 10% instead of 15%.
This tariff issue has been a long-standing point of contention between India and the United States, with former US President Donald Trump repeatedly advocating for its reduction. The announcements made in the Budget 2025 have helped alleviate these tensions.
With these duty reductions, Harley-Davidson motorcycles are expected to become more affordable, potentially expanding their customer base and boosting sales and market share for the brand.
While the basic customs duty on cars and other vehicles has also been lowered, its effect on effective duty rates remains unclear.
In the Union Budget for 2025-26, the government has introduced an Agriculture Infrastructure and Development Cess (AIDC) on the imports of such two-wheelers, whether as CBU, SKD, or CKD units.
The tax rationalization aims to lower prices compared to prior rates.
This initiative is perceived as an attempt by the Indian government to create a fair competitive environment for international manufacturers by decreasing tariff barriers in sectors where India has a robust supply chain, as stated by Saurabh Agarwal, Partner & Automotive Tax Leader at EY, in an interview with The Hindu BusinessLine.
The Trump Influence: ‘America First’ Trade Policy
This decision is interpreted as a significant signal to the new US administration under Trump. The previous US President’s administration consistently advocated for the reduction of trade barriers, especially concerning products made in the United States.
Prior to this, Trump highlighted that India imposed the highest tariffs on foreign products among major economies and even threatened to apply reciprocal tariffs on Indian goods.
“One of the most critical elements of my plan to revitalize the American economy is reciprocity. It’s vital because we usually don’t impose tariffs. I initiated that process with vehicles like vans and small trucks, etc. While we don’t impose high tariffs, China has a 200 percent tariff, and Brazil imposes significant charges. India ranks as one of the highest,” Trump stated in a notable economic policy address.
In an interview with CBS News, Trump expressed, “We are not the naïve country that suffers as poorly. India is a close friend of mine, Prime Minister (Narendra) Modi, has implemented a 100 percent tax on motorcycles. We don’t charge them a penny.”
“Thus, when Harley exports there, they face a 100 percent duty. Conversely, when they import into India, there are no taxes. I informed him it is unacceptable,” he added.
VIDEO | Reiterating his stance on tariffs, US President Donald Trump (@realDonaldTrump) spoke in Miami, stating, “Outside forces that genuinely wish us harm, but wish to improve their own country, look at others such as China which imposes tremendous tariffs. pic.twitter.com/NDW8v1WYUG
— Press Trust of India (@PTI_News) January 28, 2025
“Through one phone call, he (Modi) reduced it by 50 percent. Yet, I still find it unacceptable because 50 percent against nothing still poses an issue. They are currently addressing this,” he further mentioned.
In December of the previous year, Trump clarified that his administration would adopt a tit-for-tat stance, saying, “If they impose taxes on us, we will impose the same on them.”
“Reciprocity is crucial, as it raises the question: If India levies a 100 percent tax, why shouldn’t we charge them proportionately? They send us bicycles, and we send them bicycles. They impose significant duties, while we do not,” he said.
Trump’s view aligns with his “America First” trade policy, focusing on safeguarding American workers and families. In his inauguration speech, he proclaimed that his policies would reinstate the US as a manufacturing power.
It’s important to note that Trump has also hinted at the possibility of imposing 100% tariffs on BRICS countries, including India, should they attempt to steer away from utilizing the US dollar. The BRICS group comprises ten nations: Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, and the UAE.
External Affairs Minister S Jaishankar clarified in December that India has never favored de-dollarisation and that no proposals exist for a BRICS currency.
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Other Possible Customs Duty Reductions in India
India’s strategic focus is on fostering domestic manufacturing.
As reported by News18, the government is contemplating customs duty cuts on approximately seven to eight premium products, including specialized steel, high-end motorcycles, and electronic devices.
The duty on luxury vehicles priced over $40,000 has been decreased from 125% to 70%, including models like station wagons and racecars, as reported by NDTV Profit.
At present, the Harley-Davidson 440X—the smallest model in their line— is being co-manufactured and sold in India by Hero MotoCorp. The company has recorded sales of 12,188 units of both the Harley-Davidson X440 and the X440-based Hero Mavrick 440 from April to December 2024.
With contributions from various agencies
