India reduced import duty on motorcycles last week. The duty on heavyweight motorcycles with more than 1600cc engine has been reduced from 50 percent to 30 percent. On the other hand, the duty has been reduced from 50 percent to 40 percent for small motorcycles.
This seems to be a step forward to smooth the entry of American Harley-Davidson motorcycles into the Indian market.
Meanwhile, New Delhi hopes that the latest move will help avoid any tariff threats from the US.
Donald Trump recently returned to the White House for the second time as the President of the United States. He marked the return by taking tough trade measures against neighboring countries and allies, as well as America’s major rival, China.
India’s hope in this game is that they are ahead to some extent. But will India’s decision to cut import duties satisfy President Trump or influence his trade measures.
Ajay Srivastava, founder of the Global Trade Research Institute (GTRI), a Delhi-based research institute, was asked about this. “Canada and Mexico are literally two parts of the United States. If he (Donald Trump) takes action against them, he can easily take action against India. “
Prime Minister Narendra Modi had a telephonic conversation with US President Donald Trump late last month. During the conversation, the US president pressed India to buy more weapons from the US. He also continued to put pressure on India to maintain a fair trade balance.
In his first term as president, Mr. Trump imposed high tariffs on India. At the time, Harley had slammed India for imposing 100 per cent import duties on Davidson as “unacceptable”.
He has also declared war on what President Trump considers to be an “unfair trade practice.” While talking about this, he has also been seen repeatedly dragging the context of India.
In the past, while talking to this context, he had called India a ‘king of tariffs’. He was also heard saying that India is a “big abuser” of the trade relations between the two countries.
India enjoys a trade surplus with its top trading partner, the US. Trade between the two countries exceeded $190 billion in 2023.
Since 2018, India’s merchandise exports to the US have grown by 40 per cent to USD 123 billion. Trade in services increased from 22 per cent to $66 billion. US exports to India stand at $70 billion.
Meanwhile, India has reduced import duty on motorcycles as well as in many cases. In the case of satellite ground installations, the duty has been reduced to zero.
India’s zero import duty has benefited US exporters who delivered satellite ground installations worth $92 million to India in 2023.
Customs duties on synthetic flavouring essence have also been reduced from 100 per cent to 20 per cent (last year US exports amounted to $2.1 million).
The duty on fish hydrolysate for aquatic feed has been reduced from 15 per cent to 5 per cent (US exports in this sector amounted to $3.5 million in 2024).
India has also eliminated duties on selected waste and scrap items. This is an area where US exports to India last year amounted to $2.5 billion.
Mr. “This diverse range of products reflects the strong trade relationship with the US as well as strengthening India’s broad export base,” Srivastava said. “
“India was once one of the most protectionist economies in the world. In the 1970s, American political scientist Joseph Greco called it the most limited, complex… He described foreign direct investment as a regulatory system. “
This ‘inward outlook’ led to a steady decline in India’s exports to world trade. India’s exports fell from 2.42 per cent in 1948 to 2.42 per cent by 1991. It stood at just 0.51 percent.
According to Ashima Sinha, author of Globalizing India: How Global Rules and Markets Are Shaping India’s Rise to Power, “This period was driven by self-driving industrialization campaigns, export pessimism and suspicion of global alliances.
Things finally changed in the 1990s and 2000s. The average import duty was 80 percent in 1990 and rose to 13 percent in 2008.
Meanwhile, Prime Minister Narendra Modi launched the ‘Make in India’ policy to increase production in India. Since then, the tariff has risen again to 18 per cent. This figure is higher than other Asian countries such as China, South Korea, Indonesia and Thailand.
India has eliminated tariffs on almonds, apples, chickpeas, lentils and walnuts made in the US in 2023. But Donald Trump is likely to demand more. However, it is also speculated that India may be adamant on this issue due to internal political sensitivities surrounding agriculture.
In this regard, Mr. “This is where we’re going to bargain hard, and that could be a problem,” Dhar said cautiously.
Keeping China in mind, India’s strategic relationship with the United States can help reduce this impending conflict between the two countries.
Commenting on this, Biswajit Dhar also referred to the recent deportation of undocumented Indian immigrants from the United States. He explained that India’s willingness to accept the US decision sent a positive signal.
At the same time, experts believe that Narendra Modi’s personal relationship with Donald Trump can also be beneficial. According to recent reports, there will be some clarity on this issue after the Indian Prime Minister visits the White House this month at the invitation of Donald Trump.