NEW DELHI: Ironic as it may sound, but while US President Donald Trump pushes for lower import duty on Tesla cars and the iconic Harley-Davidson motorcycles when they come in to India, but neither of the two companies currently source them from America and rather prefer to get them from factories in other countries.
While Harley is importing its bikes from its mega manufacturing set-up in Thailand, Tesla – which is close to launching its cars in India – will also not be shipping the electrics from the US, but rather from its factory in Germany (India has requested the company not to import from China).
This, industry officials say, clearly brings out the fact that while there is noise and complaints from the new US administration regarding high duties on autos in India, American companies do not see the need to import fully-built products, or even semi- or completely-knocked down kits, from the US.
Companies find it better and beneficial to use other manufacturing countries due to locational advantages (that saves freight as well as time when importing to India) or because of economies of scale.
For example, look at the business case of Harley-Davidson motorcycles even after the govt decided to cut duty on imported bikes in the just-announced Union Budget. The Budget had slashed the customs duty on fully-built bikes bigger than 1600cc from 50% to 30%, while for SKD (semi-knocked down) kits, it came down from 25% to 20% and for CKD (completely-knocked down) from 15% to 10%. And for bikes with engines smaller than 1600cc, the customs duty was reduced from 50% to 40% for fully-built ones, while on SKDs from 25% to 20%, and on CKDs from 15% to 10%.
Despite this, Harley – which makes only the 440cc model (called X440) in India in partnership with Hero Moto — prefers to get the other models them from Thailand, instead of using its US factories. “There is a mega set-up in Thailand that the company uses to get its bikes to India. Beyond the 440cc that it makes here, all the other bikes – including bigger ones like Pan America, Nightster, Street Glide and Fat Bob — are being imported from Thailand,” an analyst specializing in foreign trade told TOI.
Interestingly, Harley imports its bikes to India at zero duty due to trade agreements between the two countries. “So even if India reduces the duty on imported bikes from the US to zero, Harley will still find it beneficial to get them from Thailand. This is because Thailand is closer to India and so the freight cost will be lower and products can reach faster,” another analyst said.
