Lanka Ashok Leyland resumes vehicle assembly after 27 years
Taking a cue from new Standard Operations Procedure (SOP), Lanka Ashok Leyland PLC has resumed vehicle assembly operations in the country after 27 years of its factory shut down during the import relaxation period since 1994.
Ashok Leyland’s factory in Jalthara, Homagama is now rolling out buses and lorries as the company’s imports from India has come down to zero due to current vehicle import restrictions, officials of the company said.
The vehicle assembly venture has a 28 per cent stake from India and a 72 per cent stake in Sri Lanka. 30 per cent of this is owned by local shareholders and the remaining 42 per cent is owned by Lanka Leyland Company functioning under the Ministry of Industries.
The ministry has launched the Standard Operating Procedure (SOP) on the vehicle manufacturing, assembling and auto accessories industries providing concessions to promote vehicle assembly ventures.
The government will be providing concessions for local automotive assembly using 30 per cent of locally manufactured brand-new parts in accordance with the Budget 2021 proposal, a senior official of the ministry said.
Reduction of import taxes levied on vehicle spare parts required for new production sectors will incentivise entrepreneurs engaged in vehicle repairing and vehicle assembly, he said.
Local automotive products will be promoted by giving them preference in Government tenders (domestic preference) while eliminating unfair competition for local auto manufacturers by preventing under-invoicing by importers, he added.
Buses, lorries and other vehicles were assembled in Sri Lanka at the Ashok Leyland factory until 1994 and suspended assembling its vehicles afterwards as it was cheaper to import vehicles from India than to assemble in Sri Lanka.
Ashok Leyland also plans to enter into the vehicle export market taking advantage of free trade agreements in the South Asian region and the recently introduced SOP.
The company will not only manufacture buses and lorries but also specialised vehicles such as garbage lorries, water bowsers, concrete mixing trucks, etc for the Sri Lankan market, the ministry official said.
Ashok Leyland is one of the first local companies that has taken maximum advantage of the newly introduced SOP, he pointed out.
The SOP includes guidelines and standards for registration at the Department of Motor Traffic, BOI, Sri Lanka Customs and the Ministry of Industries and for the local assembly of vehicles.
It has also specified the necessary regulations for standardisation of the assembling and manufacturing process, the automobiles and components, and the establishment of the assessment facilities.
It also has guidelines for the exportation of assembled and manufactured vehicles and the recommended exemptions of excise duties.
However leading motor traders pointed out key areas of concern in the SOP, first of which is that this policy was created without input from global automotive manufacturers through their association whose experience and insight will result in a more viable SOP, which will facilitate the sustainable success of the assembly industry.