There is a huge tax imposition on imported automobiles including cars and motorcycles, in India. Harley-Davidson, a popular motorcycle brand, may soon slash prices in India if the US government agrees to renew the country’s eligibility for the Generalized System of Preferences (GSP). The GSP allows the US market to access about 3,500 products from India at low duties or zero taxes. The Indian government will look to cut duties on high-end bikes in return.
Earlier in February, the Indian government reduced the customs duty on completely built units (CBU) of motorcycles for all engine capacities to 50%. This came as a welcome change as the government used to charge 60% duty on bikes up to 800-cc capacity and 75% on 800-cc or more. This has now become uniform at 50%. However, the duty on bikes that were imported as completely knocked down (CKD) units, for local assembling in India, went up to 15% from the earlier 10%.
The exact reduction of the customs duty is not known yet. The matter will be discussed during trade minister Suresh Prabhu’s two-day visit to the US. He said in a statement:
“We are open to further import duty cut on high-end bikes like Harley-Davidson. But we need assurance that India’s market access to the US under GSP will not be curtailed.”
Earlier this year, US President Donald Trump said that India levies high import duties on high-end bikes like Harley-Davidson motorcycles and it is unfair as the US market does not levy such import taxes on motorcycles that are imported from India. The president also threatened to impose higher taxes on the bikes that are imported from India in retaliation. However, we may see a reduction in prices after the upcoming meeting.
Harley-Davidson India currently produces Street 750 and Street 500 in its Indian plant, which is the first Harley-Davidson plant outside the US region. However, the Street 500 is manufactured only for the export market. Almost all other Harley-Davidson bikes are imported as CBUs in India.