Indian auto makers unhappy with the hike in Sri Lankan import tariffs

Wednesday 12 December 2012, 10:09 AM by

India is thinking of using diplomatic intervention in order to lower the high import tariffs on automobiles that have been implemented by Sri Lanka. An almost 100 per cent hike in import duties has been levied by the island nation of Sri Lanka, which may severely dent revenue generated from exports in India.

Recently, Rajeev Kher, Additional Secretary in the Commerce Ministry, said during a function in New Delhi, ”There are many options, one option is to approach purely diplomatically, and request the Sri Lankan government because it is a win-win situation if they cut down the tariff.”

"Last year India had exported vehicles worth USD6 billion out of which automobiles worth USD800 million had been sold in the Sri Lankan market. Now this has almost gone," Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said, commenting on the current state of affairs.

In the recent past, many Indian auto manufacturers have received considerable revenue from exports to the neighbouring island nation. Approximately 5 per cent of the exports sales for MSIL (Maruti Suzuki India Limited) are generated from Sri Lanka. Similarly, 40 per cent of the export sales for Bajaj Auto Limited (BAL) are generated from Asia and the Middle East, from which a substantial portion comes from Sri Lanka and Bangladesh. M&M (Mahindra & Mahindra) holds a 20 per cent share in the tractor market of the island nation. Two weeks earlier, higher duties had been imposed on sports utility vehicles, whereas two wheeler and three wheeler export sales have already been hit previously.

After the end of the LTTE domination in mid 2009, many Indian auto manufacturers gradually made Sri Lanka into an important market for vehicle exports. Today, these manufacturers would surely be looking for support from the Indian government, to pull them out of this troublesome situation.