The Trump effect: Why Harley Davidson bikes could become cheaper in India

Good news for bike lovers!

In a move seen as a boost for American brand Harley-Davidson, India has decided to lower import duty on high-end bikes.

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This reduction could make Harley-Davidson motorcycles more accessible to bike lovers across the country.

The tariff on Harley-Davidson has long been a source of tension between India and the United States.

But why has India decided to reduce import duty on these motorcycles now? What impact will this have on sales and the market?

Let’s find out:

Why Harley-Davidson will get cheaper in India

The import duty on motorcycles with engine capacities of up to 1,600 cc, imported as completely built-up (CBU) units, has been reduced from 50% to 40%.

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For larger motorcycles exceeding 1,600 cc, the reductions are even greater.

The duty on semi-knocked down (SKD) kits has been lowered to 20% from 25%, while completely knocked down (CKD) units will now be taxed at 10% instead of 15%.

The tariff on Harley-Davidson has been a long-standing issue between India and the United States, with US President Donald Trump repeatedly calling for its reduction. The Budget 2025 announcements have eased these tensions.

With these cuts, Harley-Davidson motorcycles in India are likely to become more affordable, making them accessible to a wider customer base and potentially driving up sales and market share for the brand.

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While the basic customs duty on cars and other motor vehicles has also been reduced, its impact on effective duty rates remains uncertain.

In the Union Budget for 2025-26, the government has introduced an Agriculture Infrastructure and Development Cess (AIDC) on the import of such two-wheelers, whether as CBU, SKD, or CKD units.

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The tax rationalisation seeks to bring down prices compared to previous rates.

This move is seen as an effort by the Indian government to create a level playing field for foreign manufacturers by reducing tariff barriers in sectors where India has a strong supply chain, Saurabh Agarwal, Partner & Automotive Tax Leader at EY, told The Hindu BusinessLine.

The Trump effect: ‘America First’ policy

The decision is being viewed as a strong signal to the new US administration under Trump. The US President’s administration has consistently pushed for reducing trade barriers, particularly on products manufactured in the US.

Previously, the US President had claimed that India imposes the highest tariffs on foreign goods among major economies and had even threatened to introduce reciprocal tariffs on Indian products.

“Perhaps the most important element of my plan to make America extraordinarily wealthy again is reciprocity. It’s a word that’s very important in my plan because we generally don’t charge tariffs. I started that process, it was so great, with the vans and the small trucks, etc. We really don’t charge. China will charge us a 200 per cent tariff. Brazil is a big charger. The biggest charger of all is India," Trump said in a major economic policy speech earlier.

In an interview with CBS News, Trump said, “We’re not the foolish country that does so badly. You look at India, very good friend of mine, Prime Minister (Narendra) Modi, you take a look at what they’ve done, 100 per cent tax on a motorcycle. We charge them nothing.”

“So, when Harley sends over there, they have 100 per cent tax. When they (India) send in they make a tremendous number of motorcycles when they send them in, no tax. I called him. I said it’s unacceptable," he added.

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“He (Modi) reduced it by 50 per cent with one phone call. I said it’s still unacceptable because it’s 50 per cent versus nothing. It’s still unacceptable. And they’re working on it.”

In December last year, Trump made it clear that his administration would follow a tit-for-tat approach, stating, “If they tax us, we tax them the same amount.”

“The word reciprocal is important because if somebody charges us - India, we don’t have to talk about our own - if India charges us 100 per cent, do we charge them nothing for the same? You know, they send in a bicycle, and we send them a bicycle. They charge us 100 and 200. India charges a lot,” he said.

Trump’s position is aligned with his “America First” trade policy, which focuses on protecting American workers and families. In his inauguration address, he had declared that his policies would make the US “a manufacturing nation once again.”

Notably, Trump had also threatened to impose 100% tariffs on countries within the BRICS bloc, including India, if they attempted to move away from using the US dollar. BRICS is an intergovernmental group comprising ten countries - Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates.

External Affairs Minister S Jaishankar had clarified in December that India had never supported de-dollarisation and that there was no proposal for a BRICS currency.

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Which other items might see customs duty cut in India?

India’s strategy focuses on promoting domestic manufacturing.

According to a News18 report, the government is considering reducing customs duty on around seven to eight high-end products, including specialised steel, premium motorcycles, and electronic goods.

The duty on luxury vehicles costing over $40,000 has been slashed from 125% to 70%, including models such as station wagons and racecars, NDTV Profit reported.

Currently, the Harley-Davidson 440X - the smallest model in the company’s lineup - is co-manufactured and sold in India by Hero MotoCorp. The company, which produces the Harley-Davidson X440 and the X440-based Hero Mavrick 440, recorded sales of 12,188 units of these two models between April and December 2024.

With inputs from agencies