US President Donald Trump is set to visit India for the first time on the invitation of Prime Minister Narendra Modi on February 24 and 25, 2020. While this visit will provide an opportunity to improve the bilateral relationship and much more, one of the things that could also happen is that PM Modi might give what Trump has been asking for all this while – lowering of taxes on motorcycles made by American automaker Harley-Davidson.
US President Donald Trump had earlier said in an interview to CBS, “We're not the foolish country that does so badly. You look at India, a very good friend of mine, Prime Minister (Narendra) Modi, you take a look at what they've done, 100 per cent tax on a motorcycle. We charge them nothing."
Trump was referring to the import duty which earlier stood at 100 per cent for vehicles coming into India as Completely Built Units (CBU).
Trump had added, "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.”
However, while the import tariff on CBUs was dropped down to 50 per cent from 100 per cent, the duties on vehicles that come to India in Completely Knocked Down (CKD) form were raised to 15 per cent, from 10 per cent.
Now, as per a report by Livemint, India has promised to cut import duties to ‘a single-digit’ for motorcycles having engines bigger than 1600cc by coming up with a new tariff classification for such motorcycles.
This move, should it happen, could also go on to help other automakers who also sell motorcycles with engines larger than 1600cc. This includes the likes of British automaker Triumph Motorcycles, Honda Motorcycles and Indian Motorcycles (also an American bikemaker).
In the last financial year, Harley-Davidson had a little less than 2,700 units sold in India, majority of which had engines ranging from 883cc to 1200cc – most of which are all coming to India in the CKD form. So, even if import duties on CBU motorcycles with engine capacity of more than 1600cc sees a cut, it may not actually make much of a difference to the sales of Harley-Davidson in India. Or even the new classification of motorcycles over 1600cc as a whole.
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