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Video: Maruti to SL: Ease 60% mandatory export rule

21 November 2013 02:31 pm - 19     - {{hitsCtrl.values.hits}}

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Country’s largest carmaker Maruti Suzuki has asked the government of Sri Lanka to relax the mandatory export clause for manufacturing, reports CNBC-TV18.

According to domestic rules in the island nation any automaker setting up a manufacturing plant has to export a majority 60 percent of the cars produced this in an effort to position Sri Lanka as an export destination.

This however, defeats the very purpose for which Maruti is setting up an assembly plant. “We feel this rule is highly prohibitive. Have asked the government to take a larger view of the overall benefits that would be accruing to the country due to our investments,” a senior Maruti Suzuki official told CNBC-TV18.

Sources say Maruti has asked its top suppliers to invest in Sri Lanka as the company seeks to fulfill another key domestic requirement. As per rules, over one-third of the component requirements should be met locally. “We had taken around half a dozen of our suppliers to meet with officials of the Sri Lankan government.

As a company we are committed to making sizeable investments along with our vendors,” another official involved in the direct negotiations with the Lankan government said.

The source, declining to quantify the investments that would be made for this manufacturing facility, said that by relaxing one condition Sri Lankan government stands to benefit.

The move by Maruti to set up an assembly plant in Sri Lanka stems from the move by the government of the island nation earlier this year to drastically increase the import duty on finished cars entering the country.

For instance, duties on utility vehicles have been increased to 173 percent from 100 percent. Similarly, the duty burden on small cars (with an engine capacity of less than 1,000cc) has shot up to 200 percent from 120 percent earlier.

This has hurt a slew of domestic carmakers namely Tata Motors and Maruti Suzuki apart from two-wheeler major Bajaj Auto. Sri Lanka has traditionally been Maruti’s top export market.

Since the announcement of hike in duties Maruti’s exports to Sri Lanka has declined 90 percent. The company expects to end FY14 with exports of around 1500 units as compared to 15,000 units in the previous fiscal. (Source: moneycontrol)
 
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  Comments - 19

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  • Ruwan Fernando Friday, 22 November 2013 12:22 AM

    Ryan,
    Their TOP export market has shrunk by 90%

    manpei Friday, 22 November 2013 04:41 AM

    Yes but think about all the jobs a plant would create for Srilankans. Japan and China and Korea and all these places don't want to build plants here and we chase away the only people who do?? We are only harn=ming ourselves

    sinhala modaya Friday, 22 November 2013 04:43 AM

    SL Govt should not give in to TN crap cars unless Indian Govt takes positive steps against tiger proxies playing anti sri lankan card to put a permanent end to it. But then again there in no one in delhi who has the backbone to stand up against their once created tiger cubs now going berserk in TN & all over the world smarting in anger for defeating terrorism for good in SL or at least for next 50 yrs

    Kolitha Saturday, 23 November 2013 03:08 AM

    True, and within next five years, most of us will be working for Chinese companies in Srilanka. And Chinese bosses will increase our productivity by 200%.

    Ranjith Silvar Friday, 22 November 2013 05:12 AM

    I changed the car as India against US and we against Indian products. Say No to Maruti.

    keerthui Friday, 22 November 2013 05:18 AM

    Never allow India to control our vital economic interests by agreeing to so called investments. Keep them at bay at any cost since much damage has already been done politically. SL should never allow indian citizens to work in our country or enhance their influence in any filed. There is another big conspiracy in the wake to disturb peace within the country.Enough damage has been done at UN,violating fishing rights within our territory and boycotting summit .

    chinwi Friday, 22 November 2013 05:27 AM

    Nonsense. Jobs in Korea or elsewhere bring forex. Setting up Maruthi means our Dollars going to India and our guys get salary in local currency. In addition, maruthi is crap. Indian cheap 'jilmarts'.

    Channa Friday, 22 November 2013 05:32 AM

    Ryan, you goof....SL is the number 1 car market for India. they got screwed with the tax hike and now trying to re-capture the market by setting up a plant which our fools should have demanded at least 5 years ago. Doing a deal with Toyota/Japan would be much better though.

    WDM Friday, 22 November 2013 05:37 AM

    Why discriminate between Maruti & Micro cars?Micro cars enjoys huge duty reductions & calls it made in Sri Lanka where as it is Chinese even the tyres are imported.How much is localised on Micro????It will be interesting to know whether how much is exported.

    chandima Thursday, 21 November 2013 03:09 PM

    wow! It works!!
    Good strategy......

    Ananda Thursday, 21 November 2013 04:06 PM

    We must try and get Toyota plant to the country and not Maruti.

    nalaka Thursday, 21 November 2013 04:07 PM

    Dont give any concessions to India in future

    Mason Thursday, 21 November 2013 04:08 PM

    It is going to be all China products for Srri Lankans whether they like it or not. So, Maruthi can forget about setyting up a plant here.

    Rod Thursday, 21 November 2013 04:14 PM

    No. Why should Sri Lanka bend rules to sell this crap in Sri Lanka. It must be set up for 100% export not 60%.

    Ryan Thursday, 21 November 2013 04:22 PM

    i dont know why they worry about unimportant country like sri lanka

    ban Saturday, 23 November 2013 05:06 AM

    suspend & boycott Indian impurity quality products

    Lishantha Friday, 22 November 2013 12:00 AM

    seriously! I back the govt in this! we don't need these Indian crap in future! instead they should promote a Japanese car plant here! via DM Android App

    Rohan Friday, 22 November 2013 12:00 AM

    Not knowing what's there frightens them. via DM Android App

    Jason Friday, 22 November 2013 12:02 AM

    If we want low quality products/services, unethical practices and other cultural bad habits then Maruti is fine. Best example is Airtel which is now planning to sell after providing low quality service. We must not do the same mistake again. If we want to have long term benefits both financially and internationally, we must always establish relationship with countries like Japan and Korea and create opportunities to make the economical hub of the region which could also help us to open our economy to international market.


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