Auto industry urges competitive tax structure ahead of import ban removal

As Sri Lanka prepares to lift the ban on personal vehicle imports next month, the local automotive assembly and component manufacturing industries are urging the government to implement a competitive tax structure that prioritises locally assembled vehicles.
The Sri Lanka Automobile Assemblers Association (SLAAA) emphasised in a media statement that such measures are crucial for sustaining the sector’s growth, attracting further investments, and ensuring its long-term viability.
The industry highlighted that a competitive tax structure is equally important for boosting export revenue. Within the next five years, the industry aims to increase component export revenue to US$ 2 billion from the current US$ 800 million, while creating an additional 45,000 jobs.
“Drawing inspiration from countries like Thailand and Malaysia, Sri Lanka’s strategic geographic location, government incentives, and developing supply chain infrastructure provide a strong foundation for this vision,” the SLAAA stated.
During the temporary suspension of vehicle imports, the local assembly industry witnessed significant growth. Global automotive giants such as Hyundai, TVS, Bajaj, Mahindra, TATA, Lanka Ashok Leyland, DFSK, Foton, JAC, JMC, Chery, Proton, Wuling, and BAIC have established operations in Sri Lanka, reducing the country’s reliance on imported completely built units (CBUs).
“This shift preserved valuable foreign exchange reserves and underscored the viability of local manufacturing, showcasing the industry’s capacity to attract renowned international brands,” the Association said.
Operating under the Ministry of Industries’ Standard Operating Procedure (SOP), the industry currently boasts over 17 assembly plants producing a range of vehicles, including motorcars, SUVs, motorcycles, and electric three-wheelers. Furthermore, another 17 investors are poised to launch their operations in Sri Lanka in the near future.
However, Sri Lanka’s vehicle prices remain high, partly attributed to the lack of competition amidst import restrictions.
Despite this, the industry stressed that the current environment has played a crucial role in the rapid development of the component manufacturing sector, which has evolved to produce high-quality automotive parts, including batteries, tyres, bumpers, exhaust systems, seats, plastic parts, composite parts, liners, wire harnesses, rubber components and metal components.
“These advancements have elevated the sector to international standards, positioning Sri Lanka as a competitive player in the regional automotive supply chain,” the Association stated.
The sector directly employs over 5,000 technically skilled workers, including recent graduates and on-the-job trainees, contributing to the development of Sri Lanka’s human capital. 
In addition, it has created over 10,000 indirect employment opportunities, fostering an extensive ecosystem that supports the livelihoods of thousands of families.
(NF)