Sorry Trump, despite duty hike Harley needs India

Sorry Trump, despite duty hike Harley needs India

When US President Donald Trump hosted Harley-Davidson executives at White House in February last year, he waxed eloquent: “Harley-Davidson is a true American icon, one of the greats… Whenever I go, whenever there’s a motorcycle group, oftentimes it’s a Harley.

And the sound of that Harley is a little different.” Later, in his first joint address to the Congress, Trump hinted at a “country” that was slapping 100% import duty on Harley-Davidson bikes. He was referring to India; the tariff that year was not 100% but 75%.

Last week, Trump was more forthcoming in his attack as he slammed India for charging a high 50% duty on Harleys as against 0% that America charges on Indian motorcycles. The US president threatened India with a “reciprocal” tax.

Even the American president seeking 0% duty on the iconic motorbike brand failed to unmask the harsh reality: Harley needs India.


A look at Harley’s financial performance shows it is on a downslide. While its sales in America, its home country, fell by 8.5%, the bikemaker met a similar fate across other markets globally: a 7.7% fall in Asia Pacific, which includes India; 2.6% drop in Latin America; and an overall 6.7% in global sales.

What’s even more alarming for the American cult brand is the rate at which its sales skid in the last quarter of 2017 in the US: a steep 11.1%. During the same period, its Asia Pacific numbers fell by a staggering 11.8%.

Clearly, Harley is going through a rough patch, and the turbulence is not going to ease even if India brings down customs duty to 0%. In fact, the threat of a “reciprocal” tax also lacks bite. Reason: India’s two-wheeler export to America is not even a percent of its total global exports.

Trump’s sweeping statement, point out tax experts, ignores the numbers in question. “How many motorcycles are imported from India to the US is the real question,” says Sarika Goel, partner, indirect tax at EY India. Except for some exports by Royal Enfield, there isn’t really much, she adds.


In 2016-17, India exported 2,440 bikes to America, which includes 150 bikes above 500 cc engine capacity. Though in numbers it looks big, in terms of value, it turns out to be a meagre $5.98 million. Even though the units doubled from April to November last year — 4,480 units — there were just 80 bikes above 500 cc that were exported, according to a Ministry of Commerce data.

A contrasting number, on the other hand, shows why Trump is feeling anguished. Motorcycle import from the US to India, above 500 cc, has dipped from 1,820 units in 2016-17 to 790 units in April-November last year. In terms of value, fall is from $11.60 million to $5.96 million.

Harley bikes in India, to put things in perspective, start with an engine capacity of 749 cc and are available from Rs 5 lakh and go up to Rs 54 lakh. According to a report by The Economic Times last August, Harley’s market share in India in the premium luxury segment dipped from 92.3% in FY13 to 56.4% in FY18 till June. While the Indian market for 500 cc and larger bikes grew more than fivefold between fiscal 2013 and 2015, the next two fiscal saw a cooling down of the segment, according to the report.

Auto experts reckon that even a 0% duty won’t change the ground reality for the legendary American bike maker.

“People are tempted to opt for Enfield over Harley due to the price tag,” says Amit Kaushik, managing director (India), Urban Science, a Detroit-based auto consultancy firm. Though a 0% duty might make Harley bikes more appealing, the fact remains that the price still remains an issue. Kaushik, however, points out that any drastic fall in rates might give a tough time to the local Indian brands as well as global players operating in the premium luxury segment.

While the purpose of a zero-import duty for Harley is to bring it much closer to Indian-made top-end motorbikes, it’s easier said than done. “The Harley comes at a price tag that is big, and gets bigger as it touches the top end,” says Harish Bijoor, brand strategist. Even a zero import duty will keep its price much higher than that of the Indian-made motorbike. “India is conveniently used as a whipping boy whenever there are talks of jobs being taken away from developed countries,” he says. India, Bijoor adds, is also invoked to talk about restrictive import practices faced by developed nations.

“But blaming India will only help US president whip up domestic sentiment,” says Bijoor. It won’t help Harley have a smooth ride here.

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About Craig Ballantyne 16902 Articles
I love anything to do with Harley Davidson and have two beautiful children and a beautiful partner. In my spare time i like building websites and love anything to do with the internet.

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