In a move that will considerably benefit Indian car manufacturers, the Sri Lankan Government has brought down import duties on small cars of 800-1,000cc capacity. The reduction in duties on small cars is expected to reduce from the current tax range of SLR 15-16 lakh (INR 6.86 lakh – 7.32 lakh) to around SLR 13.5 lakh (INR 6.16 lakh).
However, prices of cars above the 1000cc engine capacity will see a marginal increase following increased minimum unit tax introduced.
Dwindling foreign reserves is what has forced the Sri Lankan government to curb vehicle imports by imposing higher taxes on larger cars and SUVs. In this category, import tax on a certain brand which was at SLR 54 lakh will be increased to SLR 76 lakh. This will raise market price by around SLR 13 lakh as per dealer’s estimates.
Indian made smaller cars in the 800-1000cc capacity will largely benefit from reduction in import duties in Sri Lanka of which the Maruti Alto, Alto K10, Celerio, WagonR and the likes are a prime example. Maruti Suzuki had plans to set-up a plant in Sri Lanka, which later was disapproved. This news will sure act as a pleasant one to the Indian car maker.
Even as the Sri Lankan government has made changes in import duty with regard to small and big cars, the ‘Made in India’ three wheeler auto rickshaws have also come under the gambit of raised import duty and will have to contend with an increased rate of customs duty.