Harley shelves India plans, citing duties

Harley shelves India plans, citing duties
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First Published: Tue, May 01 2007. 12 04 AM IST
Updated: Tue, May 01 2007. 12 04 AM IST
Indians will have to wait for some time to buy the iconic motorcycles made by HarleyDavidson Motor Co, with the company saying that that the high (import) duty structure in India makes it untenable for it to launch its bikes in the country. The surprise statement comes just weeks after the American firm was allowed to import its high-capacity motorcycles into the country.
Harley said a 60% import duty on its motorcycles along with taxes of 30% would double the prices of its bikes in India, making them too expensive “for the Indian consumer to participate in the Harley-Davidson experience,” according to Tim Hoelter, vice-president, government affairs at Harley-Davidson. He was responding to a questionnaire from Mint on Harley’s plans.
He added that given that the average “industrial” (import) tariff rate in India is only about 10%, the high rate of duty “dissuades” companies like Harley from entering the market. Harley-Davidson was granted its permission in April, to coincide with thevisit of US trade representative Susan Schwab, with India allowing the import of the bike and the US allowing the import of Indian mangoes after an 18-year gap.
Harley-Davidson motorcycles, which have spawned everything from biker gear to clubs worldwide, would have been priced at Rs4 lakh for the cheapest one, had they been imported into India under the current tariff structure. That would have made the bikes twice as expensive as the cheapest car in the country which costs Rs2 lakh. India’s motorcycle market, the second largest in the world, is dominated by commuter bikes that are priced as low as Rs30,000. India sells about 6.5 million bikes a year, mostly ones with an engine capacity of 100cc, a category in which Harley-Davidson does not have a presence. Harley’s lightest motorcycle has an engine capacity of over 800cc.
India’s ministry of shipping, road transport and highways had previously blocked attempts by Harley-Davidson to enter the market, saying that the country did not have any prescribed emission norms for motorcycles with an engine capacity exceeding 500cc. The government subsequently agreed to recognize Euro III (followed in Europe) emission norms for the motorcycles and allowed import of motorcycles with engine capacity of 800cc and above, provided they meet these norms. Harley-Davidson said its bikes do meet these norms. The US at the time said trade in the sector would grow even more, if the tariffs were to come down but India did not budge on the tariffs. Indian government officials said at the time that Harley-Davidson was interested in bringing its bikes to India. But Harley-Davidson didn’t return calls seeking comment at the time the import was allowed.
No Indian manufacturer makes motorcycles with an engine capacity of 800cc or higher. Eicher Motor Ltd’s Royal Enfield division, which makes the Bullet, is the only maker of motorcycles with engine capacities of 350cc and 500cc. Its six models are priced at over Rs70,000 and the company sells around 32,000 motorcycles every year. Still, that price tag pales in comparison with the smallest of the Harleys, the 883cc powered Sportster, which retails at $6,600 (Rs2.7 lakh) in the US. Harley-Davidson, which sells 33 models, has manufacturing facilities only in the US and ships about 80,000 vehicles every quarter to various parts of the world.
“We know we could help build a leisure market for motorcycling within India, where none exists presently,” said Hoelter. “Consequently, we look forward to the day when we can enter India, but now does not seem like the right time” because of the high import duties.
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First Published: Tue, May 01 2007. 12 04 AM IST
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