Sri Lanka has cut import duty on vehicles with the capacity of 800 to 1000cc and increasing the duty on higher capacity vehicles. This could benefit Maruti Suzuki as it imports cars to Sri Lanka and most of these are in the 800 to 1000cc categories.
The Maruti Wagon R is one of the biggest selling cars in Sri Lanka, along with other small cars which Maruti imports from India. According to changes in the import duty, the present range of 1.5 to 1.6 million Sri Lankan rupees will come down to 1.35 million Sri Lankan rupees.
One of the reasons for the cut in import duty by Sri Lanka is the decreasing foreign reserves and has made the government bring measures to address the issue.
Some of the models Maruti imports to Sri Lanka are Alto, Alto K10, Celerio and Wagon R and these could benefit from the import duty cut. Maruti had to establish a manufacturing plant, Sri Lanka , however, that didn't go through.
Maruti Suzuki operates under the name of Suzuki in Sri Lanka and has many models like the Swift, Ertiga, Omni, Grand Vitara and SX4.
The import duty in higher capacity vehicles will feel the pinch, where one of the brands which cost about 5.4 million Sri Lankan rupees will now increase to 7.6 million Sri Lankan rupees. SUV's will be the most affected and could see drop in sales.
India made three-wheeler have been hit as well, the Sri Lankan government has increased the import duty price band and will affect Indian manufacturers who export three-wheelers to Sri Lanka.