Maruti Suzuki India is to take a final decision on setting up an assembly unit in Sri Lanka to commission the first facility for the small car giant outside India, motor industry sources said. The aim is to assemble Maruti Suzuki cars in the island with certain value addition. A delegation from Maruti Suzuki of [...]

The Sundaytimes Sri Lanka

Maruti Suzuki India to take a final decision soon on Sri Lanka assembly unit

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Maruti Suzuki India is to take a final decision on setting up an assembly unit in Sri Lanka to commission the first facility for the small car giant outside India, motor industry sources said.

The aim is to assemble Maruti Suzuki cars in the island with certain value addition.

A delegation from Maruti Suzuki of India has already held discussions with the high officials of the Board of Investment in Sri Lanka on matters pertaining investment and other tax concessions.

However a location of the assembly unit in Sri Lanka and investment modalities are yet to be finalised, BOI sources said.

Indian media quoted R C Bhargava, chairman, MSIL as saying, “Sri Lanka keeps changing its tax rates. When rates were low, it was a big market for us. We were exporting 17,000-18,000 vehicles to the country every year. In 2012, when tax laws were changes, duties became very high and sales dropped dramatically. We are studying whether it would be viable to set up assembly operations there. A final decision would be taken by the end of the fiscal.”

Maruti Suzuki sold around 15,000 vehicles in Sri Lanka in 2011-12, accounting for nearly half of the 29,000 new cars sold in the country that financial year.

The total size of the car market stood at 59,000 units in the period, with the remaining numbers coming in from sales of pre-owned vehicles. But after duties on automobiles were raised last year, Maruti Suzuki’s exports to the country have dropped sharply.

Suzuki Motor Corporation (SMC) has recently transferred to Maruti Suzuki the responsibility of developing, producing and marketing cars to Africa, West Asia and some Southeast Asian markets where it doesn’t have operations. Suzuki will focus on Europe, China and the rest of the markets. If manufacturing/assembly units have to be set up in the regions assigned to Maruti Suzuki, the Indian subsidiary would take the lead in investing for parent SMC.

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