SIAM requests GoI to include auto spares in Line of Credit to Sri Lanka

India has recently announced $1-bn line of credit to Sri Lanka to help the country tide over the current economic crisis

Auto industry body, Society of Indian Automobile Manufacturers (SIAM), has requested the government of India to allow inclusion of spare parts, tyres and lubricants used in vehicles in the credit line to Sri Lanka.

India has recently announced $1-billion line of credit to Sri Lanka to help the country tide over the current economic crisis. This includes food, medicines and other essentials.

Till Sri Lanka suspended imports of completely built vehicles in May 2020, the neighbouring country was an export destination for manufacturers. While Tata Motors has been exporting kits to its distributors, others including TVS Motor and Mahindra and Mahindra have assembly operations.

Bajaj Auto, Maruti and a few others were exporting fully built vehicles into the country till the ban took effect. With the country battling forex reserves and fuel shortage export of vehicle kits have fallen sharply.

In a letter addressed to Shridharan Madhusudhanan, joint secretary, Ministry of External Affairs, dated 30 March 2022, SIAM said the move would to include spares in the line of credit, would help the automobile dealers of Sri Lanka who are “now severely hampered by the difficulties in establishing line of credits”.

The banks, added SIAM, may not be aware of the social and economic impact of the severe shortage of spare parts. As a result, automobile dealers in Sri Lanka are unable to service the vehicle park leaving the owners no choice but rely on unauthorised, non-genuine parts that can compromise vehicle’s safety.

The Ceylon Motors Traders Association has also taken up the issue with the Sri Lankan Government to allow imports of spare parts into the country. SIAM also requested the Government of India to commence trade of vehicles manufactured in India with Sri Lanka in local currency.

Even as the assembly operations of all the automakers from India remain affected owing to the current situation, the companies are in a wait and watch mode and “remain committed.”  

M&M has a CKD (completely knocked down) assembly plant in Welipenna through a joint venture with its local partner, Ideal Motors, which was set up in August 2019.  It sells KUV100 and Bolero City Pickup in the market. Last week, M&M signed an agreement with Sri Lanka Police for 750 Scorpio SUVs, a company spokesperson said.

“We have 35,0000 customers in Sri Lanka and remain committed to the long term prospects of the market,” the spokesperson added.

Sri Lanka continues to be a “priority market” for Tata Motors and is now the largest selling commercial vehicle brand in the country, said a Tata Motors spokesperson. It sells the widest range of products-- from the 750kg ACE to 45-tonne Prima trucks.

“Tata Motors stays committed to the Sri Lanka market, and continues to offer after-sales services to its customers,” added the spokesperson.

Following an export ban a year ago, Bajaj Auto exported only 2000 units of motorcycles for a police order the whole of last year.