As India-US head towards trade truce, will India cut tariffs on Harley Davidson?

New Delhi: In US president Donald Trump’s long drawn tirade against India’s supposedly “unfair” trade practices, the iconic Harvely-Davidson bike has always occupied the prime spot.

In February last year, India had reduced customs duty on completely built units (CBU) of motorcycles of all engine capacities to 50%. Earlier, imports of bikes with engine capacity of 800cc or lower used to attract 60% duty, while those with capacities of 800cc, or more, attracted 75% duty. Though this effectively lowered customs duty on the high-powered Harley Davidson bikes, this did not stop Trump from complaining about high tariffs imposed by India, terming the country “tariff king”. On many occasions, Trump even threatened to put reciprocal tax on Indian bikes, which he has wrongly claimed to be selling “in thousands” in the US.

During a discussion with members of the US Congress last year, Trump had said that the decision of the Indian government to reduce the tariff on Harley-Davidson motorcycles from 75% to 50% was not enough, and had asked that it should be reciprocal, as the US imposes “zero tax” on the import of Indian motorcycles.

India, however, has always denied the charge of being a high-tariff nation, holding that its tariff regime is fully compliant with its commitments under the World Trade Organisation rules.

Though Indian trade officials often point out that the reducing the duty on Harley Davidson hardly feature in closed door trade talks with US officials, the matter had an emotional connect for the voters of Trump as the iconic bike maker closed down many of its factories in the US including the most recent one at Kansas, shifting its production base to its overseas facilities. Harley Davidson assembles 13 out of the 17 models of the bikes sold in India at its Bawal plant in Haryana, including the best-seller Street 750cc.

Trade officials of both sides are currently engaged in putting together a limited trade package that is likely to be unveiled by Trump and visiting Indian prime minister Narendra Modi this week. Whether that stops Trump’s tirade against India or not needs to be ascertained.