Assembly of vehicles and automotive component manufacturing is a lucrative industry that can contribute immensely towards propelling a production economy in a country, said Industrial Development Board Engineering Director of Engineering Division Nishantha Weerathunge at a press briefing.
“Global GDP is around 100 trillion USD and the global automotive market size is three trillion USD. However, currently Sri Lanka only enjoys a market share of USD three million in this sector and there is great potential for enhancement.”
The session was held to announce the current status of the automotive manufacturing/assembly and component manufacturing industry and to clarify misconceptions about vehicle assembly industry and its local value addition procedure. Weerathunge highlighted the fact that the ministry of industries has launched Standard Operating Procedures for local assembly of vehicles and automotive component manufacturing to encourage worldwide automobile manufacturers to locally assemble their vehicles.
“As stipulated in the SOP, over twenty percent of the ex-factory cost of an assembled vehicle must be from locally produced components. The local value addition is stringently monitored and the recommendation process is done under a very scientific and transparent method. As of today out of 31 suppliers registered with the ministry of industries 17 are fully involved in vehicle assembling. In addition, around 80 more suppliers work closely with them to supply vehicle spare parts.”
Government statistics indicate the local assembly industry has generated over 3,200 direct and indirect employment opportunities in the last few years and it has helped secure around 5,000 direct employees of the companies involved in the motor vehicle business and over 20,000 indirect employees attached to support services of these companies. Ideal Group Chairman Nalin Welgama said, “With the SOP we now have a level playing field which we did not enjoy earlier. Global auto makers are now interested in coming to Sri Lanka and partnering with us. However, we have to overcome the teething issues and certain lapses within the SOP.”
“We must have a consistent and coherent national policy on taxes for the motor vehicle industry established in consultation with all the stakeholders. India has attracted all the top players in this global industry for partnerships and collaborations. By working closely with India we can benefit largely by becoming suppliers for this global market, especially the SAARC region.”
Vehicle assemblers registered at the Department of Inland Revenue need to comply with tax compliance requirements. Tax exemption is available only to assemblers who are able to prove local value-addition as stipulated.
The post “Sri Lanka has great potential for enhancement in automotive industry” appeared first on DailyNews.