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Harley close to deal with India's Hero after stopping local manufacturing-sources

* India’s Hero, Harley in talks for distribution deal-sources

* Hero also seen manufacturing one Harley bike in India-source

* Harley has decided to stop direct sales, manufacturing in India

* Harley latest foreign auto firm to pare India operations

NEW DELHI, Sept 25 (Reuters) - Harley-Davidson Inc is in advanced talks with India’s Hero MotoCorp for a distribution deal which will allow the U.S. firm’s iconic motorcycles to be sold in India, after it stops local manufacturing there, three sources told Reuters.

The Milwaukee-based company said on Thursday it will stop sales and shut its manufacturing plant in India, effectively abandoning the world’s biggest motorcycle market after a decade of unsuccessful efforts to gain a foothold.

Harley however is in talks with Hero MotoCorp to enter into a distribution arrangement that will allow the Indian company to import and sell Harley bikes as its sole distributor, two sources with familiar with the talks said.

“Hero will be the master distributor for Harley bikes in India ... This will be a partnership, a strategic alliance,” said one of the sources, all of whom declined to be named as the discussions were private.

Discussions are also ongoing to let Hero become a contract manufacturer for at least one Harley motorcycle with 300-600 cc engine capacity, which it will launch later, the first source added.

The financial details of the deal were not immediately clear.

Asked about talks with Hero, a Harley spokeswoman said the company can’t comment on “rumours or speculation”. On Thursday, it said it was “changing its business model in India & evaluating options to continue to serve customers.”

Hero MotoCorp, which is the India’s largest two-wheeler manufacturer by sales, said it doesn’t comment on market speculation. It produced 6.4 million two-wheeler scooters and motorcycle, a third of India’s total output. (Reporting by Aditya Kalra and Aditi Shah in New Delhi; Additional reporting by Rajesh Kumar Singh in Chicago; Editing by Raju Gopalakrishnan)

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