Dec 26, Colombo: Indian automobile manufacturer Maruti Suzuki India is considering the possibility of setting up an assembly plant in Sri Lanka where the company already has a very big market share.
Maruti, which is a subsidiary of Japanese automobile manufacturer Suzuki, is undertaking a feasibility study for setting up the assembly facility in Sri Lanka, reported Autocar India magazine.
A few sites around Colombo are being investigated for economic viability and certain issues are involved that had to be streamlined, R C Bhargava, the chairman of the auto manufacturer has told Autocar Professional magazine.
"These relate to taxation and workers and have to be first sorted out with the Sri Lankan government before the plan for setting up the assembly plant can be finalized," he has said.
Sri Lanka's high import taxes on foreign vehicles, increased almost 100 percent in March 2012, have adversely affected the Indian auto exports as Sri Lanka is an important market for India's automobiles.
Sri Lanka raised the minimum import duty for imported cars to Rs. 750,000, raising the price of an Indian-made Maruti car, a popular vehicle among Sri Lanka's lower middle class, by Rs. 200,000.
Following Sri Lanka's increase in tariff on Indian autos, Indian auto manufactures have considered setting up assembly plants in the island to avoid the high import duties.