Sri Lanka’s new import duty to benefit Indian cars

The Dollar Business Bureau

In a move which could benefit India-manufactured smaller vehicles, Sri Lanka has lowered down import duties on 800 cc and 1000 cc cars.

Sri Lanka has, however, increased duty on high engine capacity cars. “Prices of vehicles above 1,000 cubic centimeter engine capacity will increase following the increase of the minimum unit tax from Friday,” announced Sri Lanka's Vehicle Importers Association.

The decision has been taken against the backdrop of Sri Lanka’s dwindling foreign reserves, as the Sri Lankan government looks to lessen vehicle imports by imposing higher taxes.

Last week, the ministry of finance had issued a notification declaring that the 800 and 1,000cc cars would now have a lower import tax band.

Indian-manufactured cars such as Maruti Wagon R dominated a majority of this category in Sri Lanka.  

With the latest announcement, the tax range for these imported cars is likely to come down to around 1.35 million Sri Lankan rupees from its current tax range of 1.5 to 1.6 million Sri Lankan rupees, according to the dealers.

India-made three wheeler auto taxies, however, will be hit by an increased tax structure and hence will have a raised rate of customs duty.

The prices of SUVs will be worst-hit with the import duty on one particular brand, which would increase up to somewhere 7.6 million Sri Lankan rupees from its current 5.4 million Sri Lankan rupees.