Donald Trump hits India yet again over Harley-Davidson bikes. The US President is unhappy with the import duties levied on Harley Davidson bikes and has threatened to increase the import duties on Indian bikes being imported to the US. Regarding this, Donald Trump said that he is not blaming India for it and it is great that the country can get away with that and how people allow getting away with that. In order to deal with such a case, Trump said that he should have a reciprocal tax as the example is very unfair and it should be implemented on counties that have 'abused' their trade relationship with the US. That said, Trump left the G7 summit on an unpleasant note and hinted that he might stop doing trade with such countries that are being unfair to the US.
Earlier this year in February, India reduced the import duties on Completely Built Units (CBUs) to 50 percent as compared to 75 percent previously. This made imported bikes cheaper. On the other hand, duties on locally assembled bikes were raised and as a result, bikes that are assembled here had to go through a price hike. During the G7 summit, Donald Trump said, "This isn't just G7. I mean, we have India, where some of the tariffs are 100 percent. A hundred percent. And we charge nothing. We can't do that." Donald Trump also stated that US is like a piggy bank and everybody is trying to rob it. The US President felt it as unfair as the US imposes no tax on motorcycles that are imported from India.
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Speaking on his conversation with Indian Prime Minister Narendra Modi, Donald Trump said, "I wasn't sure he said it so beautifully. He's a beautiful man. And he said, 'I just want to inform you that we have reduced it to 75, but we have further reduced it to 50'. And I said, huh. What do I say? Am I supposed to be thrilled? And that's not good for you people, especially as governors. It's just not right. And we have many deals like that."
One can see that Donald Trump is very disappointed with India's duty structure on imported bikes even after it has been dropped from 75 to 50 percent. On the other hand, if US agrees to renew country's eligibility on the Generalised System of Preferences (GSP), this might result in Harley Davidson bikes getting cheaper in India. The GSP allows the United States to access as many as 3,500 products at zero taxes or very low duties.
A Government official, on the condition of anonymity, said, "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."
In April, US said that it is studying the eligibility of India when it comes to GSP along with two countries namely Indonesia and Kazakhstan. At present, India benefits the most from the GSP program as it exports products worth USD 5.6 billion every year. Earlier this year, US President Donald Trump said that India currently imposes high import duties on high-end bikes and its decision of bringing down the rate from 75 percent to 50 percent was not enough. The matter is likely to be raised during trade minister Suresh Prabhu's visit to the United States.
Harley-Davidson has its production facility in Haryana through which its fulfills majority of the domestic demand. The brand currently manufactures its 500cc and 750cc motorcycles at the said production facility. While the 750cc motorcycles are being sold in India, the 500cc units are exported to the global markets.
Source: Hindustan Times