Mumbai: A severe economic crisis in Sri Lanka has forced many Indian automotive firms to slam the brakes on exports of vehicle kits as well as production at the local assembly operations they have set up in the island nation.
Shipments of vehicle kits, including those for light commercial vehicles, trucks and buses, have declined sharply, as the neighboring country is grappling with precarious forex reserves and fuel shortages, said industry executives.
While companies like Tata Motors have been exporting vehicle kits to distributors in Sri Lanka, others such as Mahindra & Mahindra, Ashok Leyland and TVS Motors have local assembly operations in the country.
“We are unable to get the kits, so we cannot put finished products out in the market,” said Rajeev Pandithage, chief operating officer-mobility sector at Diesel & Motor Engineering, one of the oldest and largest dealers for Tata Motors and Mahindra tractors in Sri Lanka.
Imports of vehicle kits are heavily restricted in Sri Lanka owing to the forex crunch.
Diesel & Motor Engineering had started assembly of the Tata Ace small commercial since there were import restrictions on completely built units of vehicles. It wants to launch the vehicle soon given the huge demand for such low-cost vehicles, said Pandithage.
Besides, the distributor can import fully built tractors. However, Pandithage said, “We are facing forex issues to open LCs (letters of credit). Before the season starts, we have a stock of at least 1,000 tractors. This time we have just about 150, which is clearly not enough.”
Farmers want to buy new tractors, he said, but higher interest rates and rising inflation are not allowing them to do so.
A Tata Motors spokesperson said the company stays committed to the Sri Lanka market and prays that the country recovers from the crisis at the earliest. “Tata Motors continues to have a positive outlook about the Sri Lanka market,” said the spokesperson.
Tata Motors has been running its operations in Sri Lanka since 1961 and the country continues to be a priority market. “The company has consistently grown grown over the years and is now the largest selling commercial vehicle brand in Sri Lanka. It has the widest range of products, from the 750 kg Ace to 45-tonne Prima trucks,” said the company spokesperson.
Two-wheeler maker Bajaj Auto said due to the forex shortage, imports of most auto products including two-wheelers and three-wheelers were stopped by the Sri Lankan government almost a year ago. “As a result, our exports in the previous year were negligible. In 2019-20, we exported over 30,000 units, which also was a decline over the previous highs,” said Rakesh Sharma, executive director, Bajaj Auto. “A small restart was made recently based on efforts to localise and generate employment there. Now, with this dislocation, we have to wait and see how that initiative unfolds.”
Mahindra & Mahindra set up assembly operations in Sri Lanka with the Ideal Group to produce the KUV 100 mini sport utility vehicle (SUV) and Bolero Maxi pickup truck in August 2019. “We cannot ramp up production as there is difficulty in sourcing,” said Nalin Welgama, executive chairman, Ideal Group. “The target was to sell at least 5,000 vehicles a year through this JV (joint venture). We sell about 200-250 of such vehicles a month. Our assembly is continuing despite the forex challenges.”
The KUV 100 and the Bolero Maxi are entry-level products and there is a good demand for them, he said.
Distributors are hoping they can accelerate production of such low-cost vehicles, which continue to have a good demand in Sri Lanka.
Mahindra & Mahindra set up a completely-knocked-down assembly plant in Welipenna through a JV with local partner Ideal Motors. “Our vehicles including KUV 100 and Bolero City Pickup have been well received. Further, last week, M&M signed an agreement with Sri Lanka Police for 750 Scorpio SUVs,” said a company spokesperson.With over 35,000 customers in Sri Lanka, M&M remains committed to the long-term prospects of the market and will continue to work on building and strengthening its brand and position in the country.”
TVS Motors retails several of its two-wheeler models such as the 100 cc economy motorcycle TVS Sport and the 125 cc scooter TVS NTORQ Race Edition through local assembly. The launch of this scooter, in January 2020, triggered a turnaround in the Sri Lankan scooter segment.
In January this year, the Sri Lankan government approved the purchase of 500 buses from Ashok Leyland for its transport board.
Queries emailed by ET to TVS Motors and Ashok Leyland did not elicit a response till press time.
As Sri Lanka battles the worsening crisis, automakers realise that production cannot be immediately ramped up due to economic uncertainty and low business activity, said industry executives. However, local players are confident that production will not come to a complete halt, they said.
As Sri Lanka moved from a market economy to a product economy, exports of CBUs (completely built units) came to a halt
Due to forex shortages, imports of most auto products including for 2- and 3-wheelers were stopped by the Sri Lankan govt
Automakers are adopting a wait-and-watch approach because of economic uncertainty and low business activity
Covid sent Lankan economy into a tailspin, drying up earnings from tourism, foreign remittances In March 2020, the govt imposed an import ban on new cars, which left car parts in short supply. (ToI)
BASL urges President to de-escalate tensions in different parts of country
The Bar Association of Sri Lanka has called upon President Gotabaya Rajapaksa to instruct the Defence Secretary, the Commanders of the Tri Forces and the Inspector General of Police to ensure that there is an immediate de-escalation of tensions in different parts of the country – especially at fuel stations – understanding the difficulties faced by the public.”
“Whilst keeping in mind that the police and armed forces are acting under very trying circumstances, nevertheless it is necessary to give strict instructions to the police and the forces to desist from violence in dealing with the public and to act with utmost restraint”, the BASL has said in a media statement.
“We also call upon you to ensure that steps are taken under the law to deal with errant officers who have subjected civilians to such violence.”
The BASL is of the view that it is not appropriate for service personnel to be deployed in the present manner in matters which essentially should be managed by the Sri Lanka Police.
The armed forces should also not be used to disturb or hinder peaceful protests as was seen last week in Galle.
Full text of the BASL letter to the President:
The Bar Association of Sri Lanka (BASL) expresses its gravest concerns at the current situation at fuel stations throughout the country and the reports of several incidents of conflicts between civilians and members of the police force and the armed forces at fuel stations. There has been video footage of civilians being assaulted by personnel of the armed forces and the police, the latest being of a civilian being kicked by an Army officer at a fuel station. There have also been situations of the police and Army opening fire into the air to contain the crowd.
Your Excellency is no doubt aware that thousands of desperate civilians are waiting in queues at hundreds of fuel stations in the country. The queues are kilometres long. The tension at the fuel stations have arisen from this desperation for which there is no immediate solution in sight.
The BASL wishes to warn Your Excellency of the imminent dangers this situation could give rise to. The present unrest could result in a conflagration between civilians and members of the armed forces or the police. Some years ago, confrontations between members of the public and the armed forces resulted in the deaths of civilians. Such incidents between the members of the armed forces or the police and the civilians will discredit Sri Lanka’s armed forces and the police.
We call upon Your Excellency to take all necessary steps to give instructions to the Defence Secretary, the Commanders of the Tri Forces and the Inspector General of Police to ensure that there is an immediate de-escalation of the situation in different parts of the country – especially at fuel stations – understanding the difficulties faced by public. Whilst keeping in mind that the police and armed forces are acting under very trying circumstances, nevertheless it is necessary to give strict instructions to the police and the forces to desist from violence in dealing with the public and to act with utmost restraint. We also call upon you to ensure that steps be taken under the law to deal with errant officers who have subjected civilians to such violence.
The Sri Lanka Army and other service personnel must be deployed only in very limited circumstances as contemplated in the Criminal Procedure Code. The BASL is of the view that it is not appropriate for service personnel to be deployed in the present manner in matters which essentially should be managed by the Sri Lanka Police. The Armed Forces should also not be used to disturb or hinder peaceful protests as was seen last week in Galle.
We trust that this will receive the immediate attention of the Government as to do otherwise may otherwise result in unprecedented turmoil and harm.
The BASL believes that the ultimate solution to the situation at fuel stations is to be transparent with the public and to ensure an equitable and effective system of fuel distribution throughout the country.
SC orders AG to submit report on fuel purchases and distribution
By A.J.A. Abeynayake
A three-member Supreme Court bench consisting of Justices Vijith Malalgoda, Mahinda Samayawardena and Arjuna Obeysekera yesterday ordered the Attorney General to submit a report on fuel purchases, the distribution thereof and the sectors to be provided with fuel on a priority basis.
The Supreme Court made the order after considering two fundamental rights petitions presented by the Bar Association of Sri Lanka.
The BASL has requested the Supreme Court to direct the Cabinet of Ministers to consult all stakeholders and independent experts to formulate and implement the necessary policies, and to provide concessions in relation to the prices of essential goods and services to the people including LP gas, fuel, electricity, milk powder, medicines and food.
The petitions were filed by the President of the BASL Saliya Pieris PC, Deputy President Anura Meddegoda PC, former Secretary Rajeev Amarasuriya, Treasurer Rajindh Perera and the Assistant Secretary Pasindu Silva.
A/L may be delayed by one month
Education Minister Sushil Premajayantha told Parliament yesterday that although it had been scheduled to hold the G.C.E. A/L Examination 2022 in November this year, it could be further delayed by another month.
Responding to a question by MP Shantha Bandara, the Minister said: “The examination should be held at least after three months of releasing the results of the previous A/L exam because the students who need to sit it again should have enough time to prepare,” the Minister said.
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