Indian Automakers in Sri Lanka wait and watch as crisis worsens

Indian automakers operating in crisis-hit Sri Lanka are in a wait-and-watch mode as the island nation's downward-spiralling economy takes a toll on services and businesses.

Top executives at , , Motor and Mahindra Finance, which have operations in Sri Lanka, said it's a challenging environment to do business but they remain committed to the Sri Lankan market, and are hoping that the situation will improve over the next 3-4 months.

Experts said some companies may mull de-scaling operations or even pull out of the country if the situation doesn't improve in the near to medium term.

The local distributors ET spoke with said there has been a reduction in per day production as the political and economic crisis escalated in the country.

They said the ground situation is very different. "We have to fend for ourselves and get foreign exchange to import kits and keep assembly lines running," said Nalin Welgama, executive chairman of Ideal Group, a leading automobile dealer.

Import of vehicle kits is currently heavily restricted in Sri Lanka owing to the foreign currency shortage. Industry executives said that shipment of vehicle kits, including those of light commercial vehicles, trucks and buses, has declined sharply, as the country grapples with precariously low forex reserves and fuel shortage.

While Tata Motors has been exporting vehicle kits to distributors in Sri Lanka, others such as Mahindra & Mahindra, and TVS Motor have local assembly operations in the country.

"We have to go with the flow," said Rakesh Sharma, executive director of Bajaj Auto.

"TVS, through its partnership with TVS Lanka, remains committed to the potential of the Sri Lankan market. While the current situation presents challenges, we are hopeful that they will be overcome," said Rahul Nayak, vice president, international business, .