The USA’s newly elected president Donald Trump has announced a handful of important financial and political reworks like cutting off future US funding to South Africa completely, to cite an example. Trump’s succession has also had an impact on various other economies as well. The Indian government has cut import duty on high-end motorcycles and cars, following Trump’s remark on our country as a “tremendous tariff maker.” The revised duty structure will make life easier for Harley-Davidson Inc. and Tesla Inc. here.
The revised duty structure says that motorcycles with engine capacity of up to 1,600 cc, if brought in as complete imports (CBUs) will now be taxed just 40%. Previously this used to be 50%. For motorcycles with engine capacities higher than 1600 cc, the cuts too are higher. Harleys are definitely going to get cheaper now!
The tax on these motorcycles has been a mushrooming friction point between India and the US. The revision seems to have resolved this to a great extent. In fact, Donald Trump explicitly said in a major economic policy speech (as reported by PTI) “The biggest (tax) charger of all is India”. He even threatened to impose reciprocal tariffs on Indian products, if the revision weren’t to be made.
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 a 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”
More Tax Cuts As Defined By Union Budget
The Union Budget 2025-26 also says that the duties on semi-knocked down (SKD) kits have been reduced to 20% from the previous 25% mark. Taxes on completely knocked down (CKD) units used to be 15% previously, which have now come down to 10%.
As per the new budget, the tariff on luxury cars with a price of more than $40,000, has fallen significantly. Previously this used to be 125%. The new rate is just 70% ( a reduction of around 56 per cent!) Station wagons, high-end luxury cars and sportscars will all benefit from this revision.
India has’t commented anything about the ‘Trump Effect’ yet. The government says that the revision is aimed at promoting domestic manufacturing (‘Make in India’ as it is fondly called). It is also known to be planning to cut customs duty on 7-8 high-end products like high-end motorcycles, electronic items and specialised steel- in the coming weeks. These cuts could also have to do with the US president calling China, India and Brazil as high-tariff countries.
Harley’s India Entry And Exit
Harley Davidson is an iconic American motorcycle brand, and something that the US takes immense pride in. It made its India entry in 2010 through a “mangoes for motorcycles” deal struck between India and the US in 2007. However, the motorcycle manufacturer announced its exit almost a decade later, calling it part of its ‘rewiring strategy’- a broader set of cutbacks.
Soon after this, Hero MotoCorp Ltd announced its strategic (non-equity) partnership with Harley to manufacture and sell their motorcycles in the country. The Harley-Davidson 440X that you see today- the most affordable Harley Davidson today- is essentially manufactured and sold by Hero.
Roads Clear For Tesla
India’s revised tax slabs has also cleared the road for Elon Musk-owned Tesla Inc. Musk had previously confirmed on X (formerly Twitter) that he plans to visit India and meet PM Modi- igniting speculations of a potential investment here. The government welcomed this with a revised EV policy that further favoured the American EV maker. As it turned out, this visit got delayed due to Musk’s “very heavy Tesla obligations.”.