Union Budget 2019: Harley-Davidson has long been at the centre of trade tensions between India and the United States. The Modi government's decision on import duties in Union Budget 2019 could have an impact on the prices of Harley-Davidson motorcycles. The decision on the matter will be taken in the light of ongoing tariff war between the two countries and the US' stymieing trade from India.
Only a handful of models by Harley-Davidson are imported as completely built units (CBU) in India. These include the premium Touring range and the CVO Limited. The more popular Street 750 and Street Rod models are manufactured in India. The Softail models are brought in as completely knocked down (CKD) kits and then are assembled here. While there are substantial import duties on the CKD components, it's still cheaper than importing CBUs.
In February this year, India halved the tariffs on completely built Harley-Davidson motorcycles to 50 per cent. US President Donald Trump, while appreciated the move, called for further reduction in the duties imposed on Harley Davidson motorcycles all the way down to zero.
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"So, when Harley sends over there, they have 100 per cent tax. When they (India) send in they make a tremendous number of motorcycles when they send them in, no tax. I called him. I said it's unacceptable," Donald Trump said after the reduction in tariffs on Harley-Davidson Motorcycles.
The initial reduction in the tariffs levied on the import of Harley-Davidson motorcycles happened after Trump threatened to increase tariffs on the import of Indian motorcycles to the US. And the US President has said that India is working on further tariff cuts.
"He (Modi) reduced it by 50 per cent with one phone call. I said it's still unacceptable because it's 50 per cent versus nothing. It's still unacceptable. And they're working on it," Trump had said.
In June this year, India imposed higher tariffs on import of 28 US items in retaliation to higher duties on certain aluminium and steel products imposed by the US last year. India also lost the Generalized System of Preference (GSP) status that allowed duty-free entry for thousands of products.
To raise more concerns, the US media reported last month that India could soon become the next target of President Trump's aggressive policy, including launching the so-called Section 301 investigation against India. Under Section 301 of the Trade Act of 1974, the administration can take action, including tariffs, to counter another nation's policies that restrict US commerce.
The Modi government is likely to factor these developments while taking a call. Meanwhile, reports suggest that Harley-Davidson might be in talks with the biggest Indian motorcycle manufacturer Hero Motocorp for a possible partnership. The mandate of the alliance, when it comes to pass, will be to develop smaller capacity motorcycles for the developing Asian markets under the "More roads to Harley-Davidson" strategy of the American company.