Trump wrong on Harley, and more to Indo-US business PDF Print E-mail
Monday, 05 March 2018 04:27
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Apart from the fact that import duties are not 50%, Trump needs to look at Indian student/tourist spend in US 


Since US President Donald Trump has once again brought up the issue of high Indian import tariffs on Harley Davidson motorcycles, it is important the iconic motorcycle company give him the correct facts. As the Indian government pointed out when he first talked of a 100% import duty on these motorcycles in March last year, the 100% import duty only applies to second-hand motorcycles; for SKD imports, the duties vary from 60-75% and the duty is 10% if the imports are in CKD form, where there is a higher level of value addition while assembling the motorcycles in India. The last budget reduced the duty on SKD imports to 50% but raised those on CKD imports to 15%. In his latest attack on Indian duties, Trump pooh poohed prime minister Modi, calling to tell him of the reduction to 50%. “Am I supposed to be thrilled?”, he asked, while saying the US didn’t impose any duties on imports of Indian motorcycles, and hinted at the possibility of reciprocal action—“so we get nothing. He gets 50 (per cent) and they think they are doing—like they’re doing us a favor”. Since Harley imports most of its kits in CKD form and then assembles them at its plant in Bawal in Haryana, it mostly pays a 15% import duty, so perhaps it needs to give all the facts to Trump, to prevent him from raising issues that are incorrect.

Even if you don’t invoke the so-called deeper and strategic partnership that India and the US are supposed to have—and in which the richer country is normally willing to give a lot more to the poorer one—there is a lot more to the economic ties between the two countries and this is not as one-sided as India’s $20 billion trade surplus makes it out to be, and certainly it cannot be reduced, as Trump is doing, to just the duty levels on imports of Harley Davidson motorcycles.

A fact sheet put out by the Trump White House when Modi visited last June, in fact, brings out many of these. In 2016, it says, Indian tourists spent $13 billion in the US and, in addition, more than 1.6 lakh students studied in the US in 2016 and spent around $5 billion in fees to US colleges/universities and supported 64,000 American jobs as a result of this—over the last decade, Indian students spent $30 billion in the US. Completion of major defence deals like the F-16 could increase bilateral sales by around $19 billion and, as and when it is complete, the nuclear power order to Westinghouse will also be a large one. SpiceJet’s order of 100 Boeing aircraft for $22 billion, the White House estimates, will create 130,000 jobs in Washington and elsewhere—with India projected to become the world’s third-largest commercial aviation market by 2020, this will only grow. Indian companies, the fact sheet goes on to say, have invested $11 billion in the US and sustain more than 52,000 jobs across 35 states. And, Indian energy companies have tied up for more than $30 billion of LNG supplies. Also, India’s IT-firms association Nasscom will tell you, Indian IT firms have paid more than $20 billion to the US taxman between 2011 and 2015 in the absence of a totalisation agreement, $375 million in visa fees and are directly responsible for 100,000 jobs in the US. Perhaps commerce minister Suresh Prabhu needs to put out these and more facts in the public domain through a well-orchestrated campaign in the US.


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