COLOMBO: Car exports to Sri Lanka -the fifth largest and fastest growing market for India-made passenger vehicles -is likely to hit a speed bump as the island nation has increased the import duty to 175% from 150%.
Martuti Suzuki is the market leader in Sri Lanka, and all the vehicles it sells are imported from India. French carmaker Renault uses its facility near Chennai to supply to the Sri Lankan market.
India’s automobile exports to the southern neighbour nearly doubled in the fiscal year ended March 31, 2016, to $305 million (nearly ` 2,100 crore at current exchange rate).
The Sri Lankan passenger vehicle market has been growing rapidly -new registrations rose to more than 1.05 lakh in 2015 from about 28,000 two years earlier -according to data on the ministry of transport and aviation website.
The fast growth and the potential offered by its underpenetrated market are attracting automakers, even as Colombo is trying to encourage them to invest locally instead of importing vehicles. The increase in tax announced in the latest national budget is in part aimed at this, said industry experts.
“It (new tax rate) will have an impact, but volume is very less. It would be good for the companies to have local production as their policy keeps fluctuating, “ said RC Bhargava, chairman of Maruti Suzuki.
