India may be forced to cut duties on imported Harley-Davidson motorcycles if the US agrees to renew the country’s eligibility for the generalised system of preferences (GSP).
The matter is likely to come up during trade minister Suresh Prabhu’s two-day visit to the US, starting Monday, a report in Mint said today.
“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,” Prabhu said speaking to Mint.
In April, the Trump administration said that it was reviewing the GSP eligibility of India, along with Indonesia and Kazakhstan. GSP is a US trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.
In February this year, India slashed customs duties to 50 percent from 75 percent on fully built and imported motorcycles. Harley-Davidson, Triumph and Indian Motorcycle were among the companies that stood to benefit from the cut.
However, as most of the range of Harley-Davidson and Triumph are assembled in India there was very little direct benefit of the reduction in duty to these companies. Any further cut in duties would provide little benefit to these brands. The customs duty on completely knocked down kits is 15 percent.
US President Donald Trump had raised the issue of higher tariffs on Harley Davidson bikes imported by India. Trump had threatened to raise taxes on India-made bikes imported by the US as tit-for-tat. KTM bikes made by Bajaj Auto and Eicher Motors-controlled Royal Enfield motorcycles are exported from India to the US.
India is the ninth largest trading partner of the US with a total goods trade of $67.7 billion as of 2016.