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.
Harley-Davidson is set to debut brand stores in India.
This initiative appears to be a strategic move to leverage the Harley-Davidson brand, as the announcement highlights their merchandise prominently.
Quote:
American motorcycle giant Harley-Davidson is gearing up to enhance its presence in India by establishing brand stores in major metropolitan areas, while also aiming to boost exports to the US and Europe. This initiative comes in the wake of US President Donald Trump expressing concerns regarding the duty on imported Harley motorcycles, arguing that a recent reduction in import duty (to 50%) is inadequate.
Quote:
The company is actively seeking partnerships to facilitate this retail growth and plans to launch with 12 stores in urban centers like Mumbai, Delhi, Bengaluru, and Chennai. “We intend to establish many more such stores.” Currently, Harley offers specific merchandise in its motorcycle outlets, targeting enthusiasts with high-impact branding.
This is a promising strategy. Royal Enfield has had success with their merchandise sales for quite some time, with some stores situated in shopping malls.
Harley-Davidson could adopt a similar approach to market their merchandise while enhancing brand visibility.
However, I am unsure about the quality of their products, as my experience has mostly been limited to smaller items like caps received as gifts. I believe their helmets are rebranded HJC products.
Harley-Davidson’s merchandise is renowned for its high quality and durability, often lasting for years despite tough usage.
That being said, it tends to come with a hefty price tag due to the official “Harley-Davidson” branding.
There are alternatives available that offer comparable quality at much lower prices—though lacking the Harley logo.
Harley-Davidson generates approximately $262 million annually from merchandise sales – link. For iconic brands like Harley, merchandise sales serve as both a lucrative endeavor and a means for brand enhancement, similar to the case with Ferrari merchandise.
Harley India is emulating Royal Enfield, which itself took cues from Harley USA. Royal Enfield features excellent standalone merchandise stores, including one in Bandra where I’ve made some purchases.
This venture will likely succeed. The brand has strong appeal, and their quality is unmatched. Profitability at the store level is a given.
Currently, they retail merchandise through their motorcycle outlets. They offer a wide selection of items including t-shirts, helmets, decals, jackets, and safety gear. However, these come at high prices. I once paid 700 INR for a small sticker for my Royal Enfield three years ago. Although I eventually removed it for aesthetic reasons, the quality was exceptional.
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Washington DC: On Friday, US President Donald Trump announced plans to soon implement reciprocal tariffs targeting countries like India and China, emphasizing that the United States will impose the same tariffs that these nations apply to American products.
Trump stated, “We will soon implement reciprocal tariffs—they charge us, we charge them. Whatever a country or company, such as India or China, imposes, we aim to be fair; that is the essence of reciprocity.”
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He further mentioned, “We have never done that before. We were on the verge of doing so until Covid arrived.”
In a statement prior to his meeting with Prime Minister Narendra Modi, Trump had expressed concerns about India’s tariff policies, remarking that “they have the highest tariffs” and noted that “it is difficult to conduct business there.”
Trump’s comments came during a press conference where he was asked about Tesla CEO Elon Musk’s meeting with PM Modi.
“They met. I assume he is interested in doing business in India. However, it’s a challenging environment for business due to the tariffs. They have the highest tariffs. It’s quite a tough place for business operations. I would assume he met with PM Modi possibly because he is leading a company and has been passionate about this for a long time,” Trump stated.
Addressing the topic of reciprocal tariffs, Trump referenced India’s historical trade practices, using Harley-Davidson motorcycles as an example of how American firms have been compelled to establish manufacturing facilities overseas to avoid high import duties.
“Historically, India has been among those with the highest tariffs. While a few smaller countries exceed them, India imposes significant tariffs. I recall that Harley-Davidson faced challenges selling their bikes in India due to the exorbitant taxes and tariffs, which ultimately forced them to set up manufacturing there,” he noted, as reported by US Network Pool via Reuters.
NEW DELHI: In response to pressure from the United States, the government has reduced the import duty on bourbon whiskey from 150% to 100% and has also lowered tariffs on various wines.
The duty on wines made from fresh grapes, vermouth, and other fermented drinks as well as unadulterated ethyl alcohol with an alcohol content of 80% has been set to 100%. Together, the import of these items totaled approximately $1 billion in the last fiscal year.
For bourbon, the basic customs duty is now established at 50%, with an additional agricultural cess of 50%. Last year, imports for the two categories related to bourbon were estimated at $2.6 million, with $0.8 million coming from the US.
The duty reductions were announced on Thursday, just hours prior to Prime Minister Narendra Modi’s meeting with US President Donald Trump, during which tariffs were a key topic of discussion. Trump reaffirmed his intention to implement what he described as reciprocal tariffs to support American industries. Before meeting Modi, he highlighted that India has some of the highest tariffs globally.
India’s tariffs on whiskey and other alcoholic beverages have raised concerns among various countries, including Australia, the UK, the European Union, Switzerland, and the US. Although India has reduced tariffs on Australian wine under a trade agreement, the UK has been pressing for lower levies on Scotch whisky as part of trade negotiations, while the EU has been advocating for cuts on wines produced within the bloc.
In the Budget presented on February 1, the government had already decreased import duties on a range of products, including premium motorcycles like the iconic Harley Davidson, in an effort to ease tariff pressures. However, this move has not prevented Trump from voicing concerns about duties in India, using Harley Davidson as an example during media interactions.
PM Narendra Modi with US President Donald Trump (File Image)
Photo: PTI
New Delhi: In preparation for Prime Minister Narendra Modi‘s upcoming talks with US President Donald Trump during his visit to the US, India is reportedly considering further duty reductions to promote American exports, according to Reuters, which cited government sources. Additionally, New Delhi might reference recent tax reductions on American imports as a strategy to bypass tariffs.
PM Modi is scheduled to visit the United States on February 12-13 to meet with President Trump. Before this meeting, India is contemplating tariff adjustments, although there has been no official confirmation as of yet.
In the coming days, it is anticipated that India may implement custom duty reductions across a variety of sectors, including electronics, surgical and medical equipment, and certain chemicals, as reported by Reuters.
These adjustments are aimed at items for which India often relies on US imports and could feasibly acquire more from the United States, such as dish antennas and wood pulp.
Moreover, it has been suggested that India might leverage recent duty cuts to evade Trump tariffs, as indicated in a report by the Times of India. Trump’s economic adviser, Kevin Hassett, pointed out India’s high tariffs, which hinder imports, and noted that Prime Minister Modi had significant discussions planned with President Trump during their upcoming meeting.
India Reduces Custom Duty on American Goods
In the latest Union Budget, India announced reductions in customs duties for motorcycles, including those made by Harley Davidson, as well as on synthetic flavoring essences. This duty reduction is expected to favor American exporters directly.
The tariff on motorcycles with engine sizes below 1,600cc has been decreased from 50% to 40%, while for those exceeding 1,600cc, it has been lowered from 50% to 30%.
India has cut the duty on fish hydrolysate used for aquatic feed production from 15% to 5%, a change that significantly affects US exports, valued at $35 million in 2023-24.
Additionally, the customs duty on synthetic flavoring essences has been reduced from 100% to 20%, corresponding to US exports worth $21 million in FY24.
The Global Trade Research Initiative (GTRI) remarked that despite the Trump administration’s frequent criticisms labeling India as the biggest tariff offender, the recent Budget has introduced notable tariff cuts across various products that benefit US exports.
“With major tariff reductions on technology, vehicles, industrial inputs, and waste imports, India seems to be making efforts to facilitate trade even amidst a strained global trading environment. It remains to be seen if these reductions will influence Washington’s perspective on India’s trade policies or become a contentious issue in the US election cycle,” the GTRI noted.
US President Donald Trump embraces Indian Prime Minister Narendra Modi during the “Namaste Trump” event at Sardar Patel Gujarat Stadium in Ahmedabad, India, on February 24, 2020. — Reuters
NEW DELHI: In its Union Budget for 2025-26, India has substantially reduced customs duties on premium motorcycles, cars, and smartphone components. This development appears advantageous for American companies such as Harley-Davidson, Tesla, and Apple, following remarks by US President Donald Trump describing New Delhi as a “tremendous tariff maker.”
Nonetheless, Finance Minister Nirmala Sitharaman stated that the adjustment of customs duties is aimed at promoting self-reliance within the Indian economy and is not a reaction to Trump’s tariff announcements.
“We are focusing on our own economy and aiming to fortify the foundations of the Indian economy to transform it into a manufacturing hub,” she asserted.
During her budget presentation on Saturday, Ms. Sitharaman disclosed a reduction in import duties for high-end motorcycles, with engine capacities up to 1,600cc imported as completely built-up (CBU) units, from 50 per cent to 40 per cent.
According to the Union Budget for 2025-26, the import duty on semi-knocked down (SKD) kits has decreased to 20 per cent from 25 per cent. Furthermore, completely knocked down (CKD) units will now incur a tax of 10 per cent, down from 15 per cent.
This shift is set to enhance the import of quintessentially American Harley-Davidson motorcycles into India, as the previous high tariffs have been a longstanding issue between India and the US.
Harley-Davidson began its journey in India in 2010, following the “mangoes for motorcycles” agreement established between India and the US in 2007. However, the American motorcycle manufacturer withdrew from the Indian market about ten years later, in September 2020, as part of broader downsizing efforts.
Nonetheless, a month later, Harley-Davidson re-entered the Indian market after Hero MotoCorp Ltd formed a non-equity partnership with the American brand to manufacture and distribute its motorcycles in India. Currently, Hero MotoCorp produces and sells the Harley-Davidson 440X, the smallest model in the brand’s lineup.
During his first term in office, Trump raised concerns regarding the 50 per cent import duty on Harley Davidson motorcycles, deeming it “unacceptable.”
Separately, Ms. Sitharaman announced that the tariff on luxury cars, including station wagons and racecars valued over $40,000, has been reduced from 125 per cent to 70 per cent. Additionally, the basic customs duties on lithium-ion batteries used in electric vehicles in India have been eliminated.
Most of the aforementioned EV manufacturers are already operational in India, developing vehicles tailored for the Indian market. However, this move could serve as a lure for American companies like Tesla, which is keenly observing the expanding Indian EV landscape.
In April 2024, Tesla CEO Elon Musk planned a visit to India to meet PM Modi, fueling speculation about potential investments in the country. However, he canceled the trip due to “very heavy Tesla obligations.”
In the 2025-26 budget, Ms. Sitharaman confirmed that customs duties on 28 items related to mobile phone battery production from countries such as the US and China have been waived. This initiative aims to lower the cost of mobile phones and accessories in India while bolstering local production, particularly as India progresses towards becoming the world’s second-largest mobile phone manufacturer.
Apple stands to gain significantly from these reductions in import taxes. A report from Reuters indicates that Apple secured a 23 per cent share of total revenue in 2024.
As US President Trump advocates for prioritizing domestic industry under his “America First” trade policy, India’s recent adjustments to import taxes are perceived as a strong signal to the American administration, seeking assurance against increased taxes or additional trade barriers directed at Indian goods.
Previously, Trump asserted that India imposes the highest tariffs on foreign items compared to major economies and threatened to enforce reciprocal tariffs on Indian products. He also warned of 100% tariffs on BRICS nations, including India, if they moved away from the US dollar.
Speculation arises that with the tax reductions on imports, India aims to capitalize on the US-China trade conflict and augment its own presence in global supply chains. Trump’s tariffs are becoming disruptive to global trade, creating uncertainty in the market. With the import tax reductions, India should be better positioned to navigate a potentially unpredictable year, as reported by Reuters.
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.
This change could enhance accessibility to Harley-Davidson motorcycles for Indian bike enthusiasts. Reuters/File Photo
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.
The Trump administration’s ongoing push for reduced trade barriers is notable. Reuters/File Photo
“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
“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.
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.
With the new reductions, affordability of Harley-Davidson motorcycles in India is expected to improve. Reuters/File Photo
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.
In a promising move for the new US administration under President Donald Trump, India has reduced the import duty on high-capacity motorcycles in the Union Budget 2025-26, providing a significant advantage for the American brand Harley-Davidson.
Motorcycles with an engine capacity of up to 1,600 cc, imported as completely built-up (CBU) units, will now incur a 40% import duty, down from the previous 50%, as outlined in the Budget documentation.
The import duty on semi-knocked down (SKD) kits has been lowered to 20%, from 25% previously.
For completely knocked down (CKD) units, the tax rate will be set at 10%, reduced from 15% earlier.
The government’s objective is to encourage domestic manufacturing.
Reports also indicate that India is considering a reduction in customs duty on approximately seven to eight high-end products, including specialized steel, luxury motorcycles, and electronic goods.
Currently, the Harley-Davidson 440X – the smallest model in the brand’s lineup – is co-manufactured and sold in India by Hero MotoCorp.
Additionally, the Budget specified that high-end cars priced over $40,000 will now face a tariff of 70%, down from 125%, reflecting the increasing demand for luxury vehicles in the country.
Hero MotoCorp, which produces the Harley-Davidson X440 and the X440-based Hero Mavrick 440, reported sales of 12,188 units for these two models during the April-December 2024 timeframe.
This marks a year-on-year growth of 77%, giving Hero MotoCorp a 13% share of this market segment.
The Made-in-India Harley-Davidson is manufactured at Hero’s Garden Factory in Neemrana, Rajasthan.
It is available in three variants – Denim (₹2.40 lakh), Vivid (₹2.60 lakh), and S (₹2.80 lakh) – with 8,974 units sold between April and December 2024, representing a 31% increase according to industry data.
(This content was sourced from a syndicated feed and only edited for style by the Gujarat Samachar Digital team)
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)
