Harley Davidson is a company that needs no introduction. It is well reputed across the world for making cruiser bikes. The American company is having a tough time though in the Indian market due to the high taxation policy. Donald Trump wants to make Harleys cheaper for Indians. Here’s how.
But what is this about?
In 2007, US negotiated a deal with the Indian government to allow for sale of fully imported bikes in the Indian market. This was done in exchange for agreeing to allow India to export mangoes to the US. While the import of bikes (fully units and CKDs) were allowed, they were taxed at 100%, something that is making those bikes expensive. This tax was levied on bikes that had engines larger than 800 cc.
Trump in an interview the other day said that he had met with officials from Harley Davidson and has now decided that he wants to change this. The following was said by Peter Navarro, Director of White House National Trade Council in an expectations letter to the Wall Street Journal:
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. 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
In the first speech to the Congress, US president Trump had the following to say:
American companies are taxed at one of the highest rates anywhere in the world. My economic team is developing historic tax reform that will reduce the tax rates on our companies so they can compete and thrive anywhere and with anyone.
He also goes on to say the following regarding his meeting with the team from Harley Davidson:
They said that in the case of ‘another’ country, they tax their motorcycles at 100 per cent. They weren’t asking for a change but I am.
This essentially means that Trump is looking to renegotiate the trade deal which currently stands between the two countries. If this does materialize, we could get cheaper Harleys.
The company has a total of 12 bikes on sale in the country, with as much as 9 CKD products. These products include the Fat Boy, Heritage Softail Classic, SuperLow, Iron 883, Forty-Eight, Street Bob, Super Glide Custom and Fat Bob. Prices for the cheapest Harley start at Rs 5.20 lakhs for the Street 750 and go all the way up to Rs 53.34 lakhs for the CVO Limited. While the company does have a manufacturing facility here in India, it is only a CKD facility which is located at Bawal in Haryana.