Even after the Indian Commerce Ministry appealed to Sri Lanka for lowering import tariffs on Indian vehicles, the island nation ruled out any immediate reduction, but said that it wishes to establish a balance of trade with India before considering such a move. Commenting on this issue, Sri Lankan Senior Minister for International Monetary Cooperation and Deputy Minister of Finance and Planning, Sarath Amunugama said, “The fact of the matter is that it (hike in import tariff) is not directed to Indian products. We have a balance of payment problem because our income from exports was not enough.”
Amunugama feels that if India bought more Sri Lankan products, a balance of trade will be achieved, as more than three times the income from exports was being spent on oil and debt repayment. Only once the balance is restored, would his country consider lowering of import tariffs. As per the Society of Indian Automobile Manufacturers (SIAM), import duties in Sri Lanka have been increased by almost 100 per cent.
Recently, the island nation has also increased duties on small cars and SUVs. In 2011, India exported vehicles for 6 billion US dollars, of which 800 million US dollars were earned from Sri Lanka. The imposition of taxes has been done to prevent the excessive use of foreign exchange for importing popular small cars and other popular vehicles.
