Sri Lanka's Finance Minister Mangala Samaraweera has raised taxes on the popular small Japanese hybrid cars, a policy reversal which could benefit smaller Indian car manufacturers without a hybrid variant.
In the revision, Samaraweera slapped a minimum duty of 1.25 million rupees on any hybrid car with an engine capacity of less than 1,000 cubic centimetres, meaning the previous duty of 825,000 rupees on a Suzuki Wagon R will now be 1.25 million.
Small Japanese hybrid cars are hugely popular and have become affordable after the November budget rationalised import duties. In Sri Lanka, small cars cost three times the cost in India due to high import tariffs.
The new move may help the smaller Indian car manufacturers who do not have a hybrid variant, the country's importers said.
The Indian Suzuki could not earlier compete with the lower cost Japanese models.
The car dealers said the new tax system narrows the price difference between the popular 660cc Suzuki models and the 1,000 cc Toyota Vitz as well as Indian-made Alto K10.
Last week, the Central Bank of Sri Lanka said the increased number of hybrid car imports has contributed to the widening trade deficit.
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