APA 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 neighbouring 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 can't 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.
Demand for Low-cost Vehicles
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.
Shipments of vehicle kits, including those for light commercial vehicles, trucks and buses, have declined sharply, as the neighbouring 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 can't 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.
Demand for Low-cost Vehicles
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.
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