Sri Lanka Hikes Auto Import Duty; India Mulls Diplomatic Effort

New Delhi: India may consider diplomatic efforts to ask the Sri Lankan government to bring down import tariff on automobiles in the wake of the island nation hiking duties that has affected exports from the country.

“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,” Additional Secretary in the Commerce Ministry Rajeev Kher told reporters on the sidelines of a FICCI function.He was responding to a query on options the government has, to deal with the matter after Sri Lanka increased import tariff on automobiles, thereby hurting exports from India.

“Sri Lanka is a very important market as far as cars and commercial (vehicles) are concerned. Obviously, we are concerned about it. We believe that the very substantial rise in import tariff in Sri Lanka is going to adversely affect our car exports to that country,” Kher said.

"Recently, the neighbouring country has increased import duties on vehicles by almost 100 percent, which has adversely impacted exports from India, Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said.   “Last year India had exported vehicles worth $6 billion out of which automobiles worth $800 million had been sold in the Sri Lankan market. Now this has almost gone,” Mathur said.

Earlier the increase in duties affected small cars, two wheelers and three-wheelers exports from India. Just two weeks before, they had increased duties on sports utility vehicles as well, he added. Mathur further said SIAM had planned to host an auto expo in the country but “we have postponed it keeping the situation in mind”.