Maruti weighing car assembly in Sri Lanka as import duties soar

“Even Osamu Suzuki, chairman of the parent Suzuki Motor Corp, has given his blessings to this plan. There is not much investment needed because of low mechanisation — it will basically be a sophisticated garage with a flexi-line for car assembly,” the official said.

Industry experts suspect that Sri Lanka’s move to set up high tariff barriers for imported vehicles could have been influenced by China to get a foothold in the country. This is because most of the car, two-wheeler and commercial vehicle segments is currently dominated by Indian players like Tata Motors, Ashok Leyland, Bajaj and Maruti Suzuki, but none have an assembly plant there. However, in October, Chinese car manufacturer Geely became the first to announce a $20 million assembly plant in Sri Lanka with local partner Micro Cars.

“There is virtually no vehicle manufacturing in Sri Lanka; so they are looking to encourage local investments,” an industry executive said. Mumbai-based utility vehicle major Mahindra & Mahindra is also reportedly talking to its Sri Lankan partner, Ideal Group, to set up a local assembly plant at an investment of Rs 11 crore.