| Action Alert:
Hurley burley harley Hectic political and trade negotiations are on to allow entry of the America’s cult and icon Harley Davidson bike into the Indian high-end two-wheeler market through the direct import route. Only getting into Indian market has not been a cakewalk. For once India can boast of blocking the entry of the US products for failing to meet its tight emissions regulations. Now the US government has come in support of the company to plead for relaxation of emission norms as well as a reduction in import duty. It wants the bikes to be treated in the same category as small cars. The Indian government is under severe pressure to grant permission to import of 5,000 Harley Davidson bikes with 500 cc engines. These vehicles expected to cost between Rs 4 lakh to Rs 14 lakh targets the neo rich youth of India. Harley has recently secured the Vietnam market after lowering of import tariffs through a new trade agreement. The Indian Ministry of shipping, road transport and highways, (MoSRTH) responsible for setting of the emissions regulations in the country has raised serious objections to lowering of emissions standards to create space for this privileged import. Fortunately, MoSRTH has not buckled under pressure yet. It upholds the fact that two-wheelers are one of the major contributors of air pollution in Indian cities and any relaxation in norms will lead to high level of pollution. The US pressure has not waned. An inter-ministerial group meeting has now been scheduled this month with representatives from the commerce, petroleum, heavy industries, environment and MoSRTH, to discuss the issue. Apparently, the Commerce ministry has forwarded a proposal to allow import of these bikes on a case-by-case basis for individual buyers and not for stock and sale in the country. The overriding question is not that these are luxury and high-end products, or that the imported vehicles will be very small in numbers. It is a question of a regulatory principle. No sovereign government should be asked to lower domestic regulations to favour specific imports. This has no precedence in the United States nor should this be accepted or encouraged in India. MOSRTH needs strong political support to stand by its position against this unfair demand for lowering of norms. The MOSRTH however must be cautioned that it may not be appropriate to hold, as it has, that India does not have norms for “high emissions that these bikes produce”. This can be conversely used to argue, that more lenient standards can be allowed for these bigger vehicles. It is true that India does not set emissions standards according to the engine size classes. It is also true that the majority of the Indian vehicles are of the engine size class of 150 cc and less, and there are few vehicles with bigger engines. But it is evident in Europe that the norms for the bigger engine classes under the new norms for two-wheelers that have come into force in 2006 are equally tight or even tighter for some pollutants like hydrocarbons than the smaller engines (see table). Even more significant is the fact that in Europe the norms meant for the engine size class of more than 150 cc apply to all high-end vehicles regardless of how big their engine sizes are. It covers the range as high as 700cc and above. There is no information available to show that the European Union has lowered guard to make special allowance for Harley Davidson bikes. Then why this demand for preferential status from a developing country government that can lead to market distorting policies within India? Any compromise at this stage will have deep repercussion in the future when this size segment will begin to gain ground in cash rich cities. Already companies like the Eicher Motors are waiting in the wings ready with prototypes with engine size as high as 500 cc to 625 cc for the upmarket segment. India will have to be ready with regulations for all but certainly not more lenient than the existing and the future standards proposed under the auto fuel policy. Two-wheelers are a very special dilemma in India and will require a very stringent approach. The bottom line of all this is the simple guiding principle of bilateralism. India cannot get into unequal negotiating relationships. Any investor or a market seeker will have to respect the laws and regulations of the host country before they are allowed entry. Table: Two wheeler mass emission norms in EU, India and US
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