India-US BTA: Harley Davidson bikes to get 0% duty, gradual tariff reduction on luxury cars

India will eliminate duties on the iconic Harley Davidson bikes and offer concessional rates for luxury ICE and hybrid cars from the US as part of the bilateral trade deal even as it expects close to $74 billion of its $86 billion exports to get benefitted by lower duties in the trade pact.

According to official sources, India will eliminate all duties on imports Harley Davidson bikes between 800cc to 1,600 cc from the day the bilateral trade agreement (BTA) is signed. There will be no import quota for these as there is a limited market for them in India. It will also offer concessional duties on other high range bikes from the US.

Highend luxury cars from the US will also see a phased reduction in tariffs. While from day 1 of the BTA becoming effective, the import duty of 66% on diesel cars above 2,500 cc and petrol cars of 3,000 cc will be reduced to 50%. Over a 10-year period, the duty will come down to 30%. Officials said the benefit will be available only to internal combustion engine (ICE) and hybrid cars and not to electric vehicles.

Wines and spirits from the US will also have concessional duties but officials said it would not be as low as those offered to the European Union.

Boost to Indian exports

Meanwhile, India is also set to get significant gains to its exports through lower duties. As per the Executive Order from the White House, the 50% tariff on Indian exports has now been reduced to 25% effective February 7. The tariff will be further lowered to 18% in coming days following another Executive Order from the US. The bilateral trade agreement will be signed after a month or so once the legal scrubbing of the text is completed. “More concessions are likely after that,” another source elaborated.

India exported $86.5 billion worth of goods to the US in FY25. Explaining the math of the trade deal, officials said that reciprocal tariffs on $30 billion of these exports is now down to 18%. Goods worth $4 billion are already exempt from tariffs while the tariffs on $40 billion worth of goods is already at zero and for others will be brought down to zero after signing of the BTA.

Higher tariffs will be levied by the US on about $12 billion of exports including items under Section 232 of the US Expansion Trade Act such as steel and aluminium. Officials explained that the tariff on generic pharma where India exports $14 billion to the US will also be at zero while for some auto components it will be at zero and others at 18%.

India and the US today announced that they have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade (Interim Agreement).

Commerce and industry minister Piyush Goyal called it a fair, equitable and balanced agreement that would make India future ready, give a boost to exporters and Make in India and also protect the interests of Indian farmers by safeguarding key interests in agriculture and dairy.

Russian crude oil purchase

He however, declined to respond to questions on purchase of crude oil from Russia, noting that would be responded to by the Ministry of External Affairs. As per the joint statement, “India intends to purchase $500 billion of U.S. energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years.”

The Executive Order by the White House by US President Donald Trump has also said that the US government would monitor whether India resumes directly or indirectly importing Russian Federation oil, as defined in section 7 of Executive Order 14329.  If the Secretary of Commerce finds that India has resumed directly or indirectly importing Russian Federation oil, the Secretary of State and specified officials can recommend whether and to what extent the US should additional action as to India, including re-imposition of a 25% penal tariff.