Maruti weighing car assembly in Sri Lanka as import duties soar
Sri Lanka ranks among the top five export destinations for Maruti. In 2011-12, Maruti’s sales there accounted for over half of the country’s new car market — it sold about 15,000 units in the country, while total new car sales stood at 29,000 units. The total car market size in the island nation for the same year was 59,000 units, of which 30,000 were refurbished cars.
In April, Sri Lanka raised car import duties from 120% to as much as 200%. In November, it increased the ‘minimum assessable value’ for cars to 7.5 lakh Sri Lankan rupees (SLR), from SLR 4.5 lakh — meaning even if the Maruti Alto’s landed cost is SLR 5 lakh, the 200% duty will be calculated instead on SLR 7.5 lakh. The move has eroded Maruti’s cost-competitiveness and is poised to lead to a fall in exports to Sri Lanka this fiscal.
“We are assessing the need of setting up a completely-knocked down (CKD) plant in Sri Lanka since increased duty rates will affect our sales there this fiscal,” a company official involved in the planning process told FE.
Another Maruti official said that
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