US motorcycle Company Harley Davidson decide to step back from India: Why?

Harley Davidson

As the Indian Government and the pandemic outbreak continues to build pressure on foreign vehicle companies, US motorcycle giant Harley Davidson has decided to stop it’s manufacturing in the country. The high tariffs by the government make it difficult for these companies to build scale and buyers find them too expensive.

  • High taxes by the Indian Government on foreign manufacturers likely to be the reason for the exit
  • Earlier this month, Japanese company Toyota had also announced that it will not continue its expansion in India for the same reasons.
  • The setbacks are likely to affect Narendra Modi’s policies to retain foreign investments in the country.

The new decision will cost the company over $75 million in reconstructing its manufacturing units, around 70 redundancies and it’s manufacturing plant in Bawal.

Does Harley Davidson decide to step back from India, but Why?

Harley set up its plant in India in Bawal, Haryana, in 2011 and since then it has been facing huge competition from Indian company Hero Motocorp and Japan’s Honda. The company has nearly 25 outlets in India and has sold nearly 25,000 units in the country with an average of 3000 units every year. Expert’s said that it was the failure of the company that it was not able to expand its brand in the country.

The outbreak of Covid-19 had reduced its sales in India by nearly 64 per cent.  India is one of the largest sellers of motor vehicles in the world and sells nearly 17 million motorcycles and scooters annually. Also Read: Google Pixel 4A 5G and 5 Specifications Leaked- Check Price, Features, & Latest Updates

Last year, American President Donald Trump had argued that the high levies on Harley Davidson by India was unacceptable. The company’s request for the government to reduce taxes have proved in vain.

According to the company, this is a part of its new strategy. There were rumours that the company has been in talks with one of the leading motorcycle sellers in the local market for collaboration although there has been no revelation regarding which company.

Earlier this month Toyota Motor Corp had also stopped its production in India owing to the high tax regimes. The stepping back by the foreign companies have profoundly affected PM Narendra Modi’s plans to bring global companies to India in an effort to mitigate the economic troubles brought by the coronavirus pandemic.

The taxes of motor vehicles including cars and two-wheelers in India is as high as 28%. Additional taxes can further increase it from 1-22% based on type, length and engine size

The Indian government has decided to offer subsidies worth $23 billion in order to attract International firms to its land, according to sources surrounding the subject. Although discussions about lowering taxes on foreign motor vehicles continue to be in progress, no decision has been finalised yet. With the coronavirus pandemic on loose, many people within the motorcycle sectors have lost their jobs and many are at stake.

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