Sri Lanka’s Central Bank today slapped a 100 per cent margin on commercial banks for car importation, a move that may affect the Indian car market.
Accordingly the importation of vehicle categories could only be done with a minimum cash margin of 100 per cent, the Central Bank here said.
In an obvious reference to the depreciation of the Indian rupee and also the Japanese yen, the bank said, “the currencies of several trading partner economies have sharply depreciated against the Sri Lankan rupee. As a consequence there is a growing possibility that the importation of motor vehicles into Sri Lanka could be accelerated in the period ahead”.
Analysts said the move was aimed at easing the currency pressure.
The Sri Lanka rupee has fallen to the level of 135 to the dollar this week prompting central bank intervention in the forex markets, analysts said.
The margin rule would have a direct bearing on motor car imports from India.
The island’s vehicle registrations hit a new low of 23,544 in February 2013, down 44 per cent from a year earlier.
This was after import taxes were hiked to curb imports in 2011.
Of the Indian brands, registrations of the Maruti Zen model were down 88 per cent in February 2013 from a year earlier and the BMW 5-series was up 411 per cent.
Three-wheelers, mostly of Indian origin, fell to 6,478 in February from 8,178 in January, and motor cycles fell from 14,002 to 11,941.
The import tariff on vehicles was mainly hiked as part of a measure to fix a balance of payments crisis.
However, the registration of the super luxury BMW 5 series was up 411 per cent from a year earlier to 54 but was down from 82 in January.
BMW vehicles sales are believed to be driven by duty-free vehicle importation permits given to elected representatives and professionals.