India’s diplomatic stand on Sri Lanka’s human rights violations seems to have cost Indian vehicle manufacturers dearly. Last year, after India voted against Sri Lanka in the UN Human Rights Council (UNHRC), the island nation increased duties on vehicle imports. Now that India has again voted against Sri Lanka on the US-sponsored UNHRC resolution, Indian automobile makers fear there might be a similar knee-jerk reaction this time as well.
Last year, Sri Lanka had raised the import duty on cars from 120-291 per cent to 200-350 per cent, from 51-61 per cent to 100 per cent for three-wheelers, and from 61 per cent to 100 per cent for two-wheelers. There was another round of excise duty hike, too, about four-five months ago.
Companies such as Tata Motors, Mahindra & Mahindra, TVS Motor Company, Hero Motocorp, Bajaj Auto and Maruti Suzuki, for whom Sri Lanka is a key export destination, are experiencing a significant slowdown in demand following the import duty hikes, which have made their vehicles very expensive in the island nation. Tata Nano, for instance, has nearly doubled its price since its launch.