Harley-Davidson bikes will become cheaper in India under US trade deal; impact on Hero JV unlikely

New Delhi: Fully built imported Harley-Davidson motorcycles will become significantly cheaper as the Indian government decides to remove import duties on these premium American motorcycles in the interim trade deal with the US.However, the removal of tariffs on high-end motorcycles – with engine capacities above 800cc – a long-standing demand of US President Donald Trump – is unlikely to impact Harley’s association with India’s largest two-wheeler maker Hero MotoCorp, the sole global manufacturer of the US company’s 440cc mid-size motorcycle platform.

Trump had earlier spoken of ending preferential treatment for a large number of Indian goods that enter the US duty-free, calling the country “a nation with very high tariffs”. He had mainly cited the example of Harley bikes at the Conservative Political Action Conference (CPAC) in his last term and said, “If we send a motorcycle to India, they charge 100% rate. If India sends a motorcycle to us, we don’t charge anything.”

Senior government officials aware of the development said that under the framework of the interim agreement, India has agreed to remove import duties on two-wheelers exported from the US with engine sizes above 800cc to 1600cc. These motorcycles are currently subject to a 44% import duty, consisting of a basic customs duty of 40% and a social surcharge of 4%. “The easing is aimed at addressing US concerns,” said VG Ramakrishnan, managing partner of Avanteum Advisors LLP.

This is “without having a meaningful impact on market access or production in India.”

Ramakrishnan said the removal of customs duties will only benefit Harley’s higher-priced motorcycles. “President Trump has always referred to Harley-Davidson when calling India a high-tariff nation. Harley is a visual language for US manufacturing, and this relaxation is intended to recognize that.”

The Indian two-wheeler market, which produces 20 million units per year, is dominated by mass-market motorcycles with 110-250cc engines. Premium motorcycles such as those sold by Harley and others such as Ducati, Triumph and Kawasaki are in limited supply.

Harley-Davidson sold 187 fully imported motorcycles with 800-1600cc engines, priced between ₹14.54 lakh and ₹45.75 lakh, in the Indian market in the first nine months of this fiscal, according to data from industry body Society of Indian Automobile Manufacturers.

Harley’s HD X440 and HD These are manufactured by Hero MotoCorp at its plant in Neemrana, Rajasthan under a manufacturing and distribution pact. Founded in 1903, Harley decided to halt production in India in 2019 due to weak demand and sales, mainly due to high import duties that made its products uncompetitive. A year later, it struck a deal with Hero MotoCorp, allowing it to sell locally developed bikes at more attractive prices.

While electric cars have been left out of the scope of the interim trade pact, India has also agreed to reduce customs duties on diesel cars with an engine capacity of more than 2,500 cc and petrol cars with an engine capacity of more than 3,000 cc from about 60% at present.