The Indian auto industry has decided to scrap plans of organising an auto show in Sri Lanka after five years owing to the high duty rates in the country. The industry alleges that Sri Lankan government has adopted an "anti-India" stand in favour of China, reports CNBC-TV18's Ronojoy Banerjee.
This is clearly turning out to be what many believe a possible trade war between India and Sri Lanka. Let us look at what has happened over the last several months. On April 1, the Sri Lankan government decided to increase duties on practically all range of vehicles that are sold in the Sri Lankan market, which impacted the Indian exports to Sri Lanka severely. This is barely seven days after India had voted against the Sri Lankan government for alleged Human Rights violation in the United Nations.
Last year, Maruti had exported about 15,000 units of vehicles to Sri Lanka. This time around exports are likely to be less than 2,500. The industry feels that the Indian companies are being unfairly targeted. About a month ago on November 8, the Sri Lankan government had announced the budget and the Indian industry was hoping that there will be some clarity and relief.
Things became worse as they only made it clear that only certain segments of car where India has a big advantage only those vehicles will face duty rates. Indian officials are worried and are planning to take up this matter diplomatically.