India’s recent Budget has introduced what’s being dubbed as “Harley diplomacy,” aiming to make high-end motorcycles more accessible by slashing import duties, as reported by ToI. Ahead of Prime Minister Narendra Modi’s upcoming U.S. visit, the Union Budget proposes significant reductions in customs duties for fully built motorcycles with engine capacities over 1,600cc, dropping from 50% to 30%. This move is set to benefit renowned brands like Harley-Davidson, Ducati, Honda, and Suzuki, making these luxury bikes more affordable for Indian consumers.
Moreover, the Budget also reduces customs duties for smaller imported motorcycles, offering relief to buyers of brands such as Honda, Suzuki, Ducati, and KTM. Fully assembled imported motorcycles will now face a 40% customs duty, down from the previous 50%. Specifically for motorcycles with engine capacities above 1,600cc, the duty on fully built imports has been slashed from 50% to 30%. Additionally, semi-knocked-down (SKD) units will be taxed at 20%, down by five percentage points, while completely knocked-down (CKD) units will see a reduced duty of just 10%.
In parallel, the headline customs duty on imported cars priced above $40,000 (approximately ₹35 lakh) has been lowered from 125% to 70%. However, with the introduction of a new 40% agriculture cess, replacing the previous 10% surcharge, the overall effective duty remains at 110%.
Also Read: Union Budget FY26: India Reduces Import Duties on Motorcycles, Boosting Premium Segment
This revision in tariffs comes amidst ongoing scrutiny of India’s trade policies, particularly in the automotive sector. While the Budget signals a reduction in headline duties for imported vehicles, including electric cars like Tesla, the effective duty rates remain largely unchanged due to additional cesses. For instance, although the basic customs duty on imported cars over $40,000 has been reduced to 70%, the new agriculture cess ensures a total tax burden of 110%, consolidating revenue for the central government rather than sharing it with state governments. This adjustment provides greater flexibility in overall taxation adjustments when required.
CBIC Chairman S.K. Agarwal highlighted that the average import duty has been reduced by 105 basis points to 10.6%, giving the government flexibility for further adjustments. However, analysts caution that while these reductions appear substantial, they may be more symbolic than a fundamental shift in India’s tariff policy.
For motorcycle enthusiasts, the impact of these changes is direct and immediate. The lowered prices are expected to stimulate demand in the premium motorcycle segment, historically hampered by heavy taxation. Brands like Harley-Davidson and Ducati are anticipated to benefit significantly, potentially expanding their market presence in India.
Also Read: Harley-Davidson Pan America ST Set for Indian Debut
Beyond motorcycles, the restructuring of duties extends to various other imported goods, encompassing solar cells, yachts, larger vehicles, and commercial transport vehicles. These adjustments come amid heightened global trade tensions, particularly with the U.S. considering new tariffs on imports from China, Mexico, and Canada, potentially disrupting substantial trade flows.
As India navigates global trade pressures while fostering domestic economic growth, the revised duty structure is poised to benefit both consumers of premium motorcycles and international manufacturers eyeing growth opportunities in India’s lucrative market.
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