In a move that could bring down the cost of imported motorcycles from high-end brands, the government on Monday slashed customs duty on such bikes to 50 per cent. So far, the import duty on bikes with engine capacity of 800cc or less was 60 per cent and on bikes with capacity of 800cc or more was 75 per cent. The recent change in duty will bring down the prices of high-end motorcycles such as Harley Davidson and Triumph.
The government may have slashed the duty by about 25 per cent, but it was not enough to convince US President Donald Trump who wanted India to cut import duty to zero. The US President feels that India has high import duty on products manufactured in America. According to Trump, US has zero tax on the import of motorcycles from India, so New Delhi should also reciprocate the same.
While addressing members of Congress, Trump said: "We have -- if you are Harley Davidson, you have 50 to 75 per cent tax, tariff to get your motorcycle, your product in. And yet they sell thousands and thousands of motorcycles, which a lot of people don't know, from India into the United States. You know what our tax is? Nothing." "So, I say, we should have reciprocal taxes for a case like that. I'm not blaming India. I think it's great that they can get away with it. I don't know why people allowed them to get away with it. But there's an example that's very unfair. I think we should have a reciprocal tax," he said.
This is not the first time when India's customs duty on high-end motorcycles facing flak from the US. Last year in March, White House National Trade Council Peter Navarro wrote to the Wall Street Journal, saying: "If India agrees to lower its tariffs on Harley Davidson motorcycles, Indian consumers will buy more Harleys and save less while Harley will sell more Harleys and invest more."
Navarro also suggested that "adjustments" were needed in US' trade ties with other countries to make them "fair and reciprocal". "Truly fair and reciprocal trade between the US and its trading partners, rather than the perpetual turn of the screw we receive now, will lead to a thousand similar kinds of adjustments as our bilateral trade deficits fall and savings and investment patterns adjust," Navarro had said in the letter.
In a notification issued on Monday, the Central Board of Excise and Customs brought down import duty on engine, gearbox, or transmission mechanism as a completely knocked down (CKD) kit in pre-assembled form of motorcycles to 25 per cent. Earlier, the duty on pre-assembled parts was 30 per cent. These changes will bring down the prices of high-end motorcycles such as Harley Davidson and Triumph.
It, however, hiked the customs duty on import of engine, gear box and transmission mechanism as a CKU kit which are not pre-assembled to 15 per cent to promote local assembling as part of Make in India initiative. The duty on these components was 10 per cent earlier.
Indian industry experts said the import duty rates have been rationalised for these motorcycles as it has been an industry demand for long and such high-end bikes are not manufactured in India currently.
(With inputs from PTI)