Sri Lanka’s expenditure on motor vehicle imports dropped by 27.1% month‑on‑month to US$ 182 million in June 2026, according to the Central Bank.

According to the Central Bank of Sri Lanka’s (CBSL) latest External Sector Performance report, the decline covers both personal and commercial vehicles.

Despite the June slowdown, cumulative spending on vehicle imports during the first half of 2026 still amounted to US$ 1.25 billion. 

This marks a notable reduction compared to US$ 1.57 billion recorded in the second half of 2025. (Newswire)

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Sri Lanka has already spent nearly USD 600 million on vehicle imports in the first three months of 2026, raising concerns that annual expenditure could climb well beyond earlier forecasts, Central Bank Governor Dr. Nandalal Weerasinghe said.

The Governor noted that if the current trend continues, vehicle import costs could reach USD 2.4 billion by year‑end, surpassing last year’s figure of USD 2 billion.

He explained that last year’s spending had already exceeded expectations: 

“We thought it would stop at USD 1.5 to 1.7 billion, but when it reached 2 billion, Treasury revenue rose even further. That was one reason revenue increased more than expected.”

Dr Weerasinghe added that the Ministry of Finance had forecast fewer vehicle imports in 2026 than in 2025, but current data suggest otherwise.

“Now, according to current data, in the first three months of 2026, about USD 600 million worth of vehicles have been imported. If that continues until year‑end, it means USD 2.4 billion in vehicle imports, higher than last year.”

Despite the rising import bill, he emphasised that government tax revenue targets do not appear to be at risk. 

“Therefore, at present, it does not seem to negatively affect government revenue,” he added.

Central Bank Governor Dr. Nandalal Weerasinghe disclosed the information while addressing a media briefing held on Monday (18). (Newswire)

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Vehicle imports are expected to return to normal levels in 2026, Central Bank Governor Nandalal Weerasinghe said.

He said Sri Lankans are likely to spend about 1.5 billion U.S. dollars on vehicle imports in 2025 — higher than the earlier estimate of 1 billion dollars — due to pent-up demand following the lifting of restrictions.

Weerasinghe said the higher import levels, combined with significant taxes on vehicles, will boost government revenue and help reduce the budget deficit for the first time in several years.

Industry observers note that demand for vehicles has already begun to ease after an initial wave of strong interest. (Newswire)

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A special Gazette notification has been issued amending key import and export regulations, including permitting Bureau Veritas inspection certificates and online authentication of documents, to release imported vehicles. 

The Gazette notification, dated 19 March 2025, has been issued by President Anura Kumara Dissanayake, in his capacity as the Minister of Finance.

The special Gazette has reportedly been issued to resolve issues surrounding several obstacles cited by vehicle importers in releasing vehicles from Sri Lanka Customs.

The move comes after the delay in releasing nearly 400 vehicles imported from Japan that were stuck at Sri Lanka Customs.

Amendments in the new Gazette stipulate that Bureau Veritas inspection certificates will now be accepted for vehicle imports from all countries. 

Per the new regulations, Sri Lanka Customs is also required to verify the authenticity of documents online before clearing motor vehicles. 

The Gazette states Sri Lanka Customs must ensure that all documents endorsed by licensed banks undergo authentication through online verification. 

Recently, vehicle importers also charged that a flawed decision on import regulations has resulted in around 400 vehicles being held at Sri Lanka Customs for over 20 days.

Chairman of the Vehicle Importers Association of Sri Lanka Indika Sampath Merenchige said that the requirement to specify either the production year or exact manufacturing date has made compliance difficult. (Newswire)

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Deputy Minister of Economic Development Anil Jayantha Fernando has refuted recent claims that the government has decided to cancel permits issued for vehicle imports.

Addressing the Parliament today, Deputy Minister Fernando said the import of vehicles through permits has not been revoked, but the import of vehicles has been restricted for this year.

He further stressed that the government is not in a position to cancel the vehicle permit benefit.

“There is no permanent decision regarding vehicle permits, while officials or those with the necessary qualifications should not be deprived of benefits. When these benefits were given, the actions taken in the past could have included wrong decisions. Since they do not receive a fair salary or benefits, sometimes these permits or other things have been used as a means of leverage. However, those can be examined separately,” he said. 

In terms of the number of permits issued, Deputy Minister Fernando said per the data, there is a significant number, about 15,000 to 20,000 permits.

“If we consider the foreign exchange reserves and open up permits, we will not be able to reach the economic targets we’ve set this year. The economy will not be able to expand. Therefore, it is not a policy issue but a priority issue, and a decision has not been made to cancel it,” he explained.

Recently, participating in the ‘Sirsasa Satana Programme’, President Anura Kumara Dissanayake said that vehicles will not be allowed to be imported using permits this year. (Newswire)

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Government Spokesman, Minister Nalinda Jayatissa has responded to agencies publishing advertisements indicating that they will get the opportunity to import any vehicle to Sri Lanka soon.

Responding to the advertisements, Minister Jayatissa said no decision has been taken so far regarding granting permission for the import of all types of vehicles.

“Deputy Finance Minister Prof. Anil Jayantha Fernando participated in the press conference before the last cabinet press briefing. He announced the decision of our cabinet regarding vehicle imports. Accordingly, the government is working to allow the import of vehicles with certain restrictions,” the Government Spokesman said. 

Minister Jayatissa requested agencies not to confuse the public by posting advertisements that claim they are allowed to import any vehicle.

“When making decisions on vehicle imports, the decision is taken while considering our reserves and the economy. We are not ready to take any decision that will put pressure on the economy,” he added.

The Government Spokesman made the remarks while speaking during a television interview with a local media. (Newswire)

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The next big thing on the export front is likely to be automobiles. Major car manufacturers are making plans to ensure that India becomes a global hub for exports. There are already signs of progress with the latest data for April showing that passenger vehicle exports have risen by as much as 21.1 percent while two-wheeler exports have shot up by 24.3 percent.  

State of Economy

Undoubtedly, this spurt comes on the back of a low base as overall automobile exports fell by 5.5 percent in 2023-24, according to the Society of Indian Automobile Manufacturers (SIAM). This decline has been a result of continuing geopolitical tensions, a slowing global economy, and a foreign exchange crisis in some key markets.

Yet the outlook for the coming year looks increasingly bright as major manufacturers are now increasingly looking to export rather than only focus on the large domestic market. This is especially so in the passenger cars segment. Leading Japanese car companies like Honda, Toyota, and Suzuki are even reported to be gearing up to supply cars to their home market. The plans to send Indian-made vehicles to the quality-conscious Japan market highlight the confidence that these cars will meet the stringent standards for imports in that country. 

Some car models are now being made exclusively here and exported both to Japan and Southeast Asia. These are the same manufacturers, it must be recalled, who were wary of investing in this country in the eighties when Suzuki took the plunge and set up a joint venture with the government. Osamu Suzuki was considered a maverick of the Japanese auto ecosystem for having taken this decision in a risky untried market.

Honda and Toyota as well as U.S. and European manufacturers made investments over a decade later. It took them many years to overcome reservations over dealing with the complex bureaucracy and intricate regulations of the Indian economy. 

South Korean manufacturers like Hyundai were quicker off the mark and entered the Indian market in 1996. This is probably why their marketing and distribution systems can match Suzuki. Both the joint venture Maruti Suzuki and Hyundai have been the market leaders for many years now. As far as car exports are concerned too, they remain the bigger players. Yet total passenger car export volumes are still not enough to bring India to the list of top ten global exporters. 

It will thus take a tremendous effort by the domestic automobile industry to become a major player in world markets. On the plus side, passenger cars showed an upswing of about six percent in exports in 2023-24  The rise in this segment is being attributed to improvement in supply chains as well as easier availability of semiconductors, the key component that had stalled production over the past few years.

The slowdown in demand for other vehicle categories like commercial vehicles and two-wheelers is largely due to a faltering economic revival in major export destinations. Geopolitical tensions including the Ukraine war have hit emerging economies which are among the key markets for commercial vehicles and two-wheelers. Consequent foreign exchange constraints have hit purchasing abilities in these countries, leading to a dip in exports.

Passenger cars, on the other hand, are being shipped to a variety of countries including Mexico, West Asia, and North Africa. South Africa is also emerging as a market especially for electric vehicles while Maruti Suzuki is reported to be sending cars as far away as South America.

There is thus an air of optimism in the automobile industry over export growth in the coming years. This has been aided by the fact that Indian emission and quality norms are now largely up to international standards. This ensures that cars being produced here can meet the exacting standards of developed economies like Japan. It is for this reason that Toyota is reported to be exporting e-drives, a critical component in cars with advanced hybrid technology. 

As much as 70 percent of production is being set aside for exports. Similarly, Maruti Suzuki is planning to send its first lot of EVs to Japan and Europe. It has also set targets envisaging a threefold rise in exports over the next five years.  The strategy for smaller domestic players like Renault Nissan is to use Indian plants largely for exports.

But to achieve a big leap in exports, much will depend on the ability of the automobile industry to leverage its current advantages. These include lower manufacturing costs, cheaper labour, and availability of skilled manpower along with a highly developed ecosystem of component suppliers. The latter has evolved over the past few decades and become the backbone of the Indian automobile sector. What needs to be seen now is whether the industry will be able to resist the lure of meeting the demand of a large and expanding domestic market and instead move towards an export-oriented approach. 

In this context, one must recognise the significant role of the automobile industry in the country’s economy. It accounts for a commanding 45 percent of manufacturing GDP while contributing 7.1 percent to the country’s overall GDP, according to official data. A McKinsey survey last year estimated it provides 37 million direct and indirect jobs and it may create 65 million new jobs by 2026.

Yet another study by consultancy firm Arthur D. Little says India has the potential to become a one trillion dollar auto export powerhouse by 2035. Currently, it is the fourth largest market in the world valued at 250 billion dollars. It is thus abundantly clear that the automobile sector is one of the biggest engines of growth for the economy.

It is against this backdrop that the new government must pay special attention to an industry that has the potential to become an export powerhouse. The focus on electric vehicles including subsidies on production will have to continue for the time being. Other policies that provide support to exports and promote technology will also have to be evolved to meet the challenge of becoming a major player on the world stage. (Awaz The Voice)

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The Sri Lankan Government is considering lifting restrictions imposed on vehicle imports, subject to conditions, it was reported.

According to NewsFirst, a senior spokesperson for the Ministry of Finance said plans are underway to lift the vehicle import restrictions, subject to conditions, by the end of 2024 or the beginning of 2025. 

The senior Finance Ministry spokesperson further said that recommendations from the Committee appointed by President Ranil Wickremesinghe in this regard would also be considered when arriving at a final decision on the matter. 

The move comes at a time when State Minister of Finance Shehan Semasinghe had also recently revealed that discussions were ongoing related to the restrictions imposed on vehicle imports.

Earlier this month, State Minister of Finance Ranjith Siyambalapitiya also announced that the ban imposed on the importation of vehicles will continue to be relaxed in phases going forward.

State Minister Siyambalapitiya told the media that the government has taken to relaxing the vehicle import ban in phases based on the requirements of various sectors. 

Sri Lanka imposed a ban on vehicle imports following the impacts of the coronavirus pandemic in 2021/2022 and continued with the decision due to the subsequent economic crisis faced by the nation. 

However, the government commenced providing exemptions to vehicle imports in phases from 2023 subject to conditions and based on the necessities of various sectors, such as health and tourism. (Newswire)

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The ban imposed on the importation of vehicles will continue to be relaxed in phases going forward, State Minister of Finance Ranjith Siyambalapitiya said.

Speaking to reporters, State Minister Siyambalapitiya said the government has recently taken to relaxing the vehicle import ban in phases based on the requirements of various sectors. 

“We recently allowed the imports of buses and vans for the tourism sector. The vehicle import ban will continue to be relaxed in phases based on such requirements,” he assured.

The State Minister further pointed out that the programme introduced by President Ranil Wickremesinghe as the Minister of Finance since 2022 to date has seen great progress for the nation.

State Minister Siyambalapitiya emphasized that the year 2025 will also reap such benefits if the President’s current programme is continued without hindrance. (Newswire)

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The Cabinet of Ministers has granted approval for the importation of 1000 vehicles for Sri Lanka’s Tourism Sector.

According to the Cabinet decision, permission has been granted to import 750 vans which can seat 6-15 passengers, and are either electric or hybrid vehicles.

Permission has also been granted to import 250 buses that include small buses with 16-30 seats or large buses with 30-45 seats. 

Sri Lanka imposed a ban on vehicle imports due to the impact of the coronavirus pandemic and subsequently, extended the ban due to the economic crisis faced by the nation.

However, the vehicle import ban has been relaxed from time to time providing exceptions, with the government authorizing select ministries and state agencies to bring in a handful of new vehicles.

Sri Lanka’s tourism sector has become the latest industry to receive approval for vehicle imports. (NewsWire)

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State Minister of Finance Ranjith Siyambalapitiya says he will intervene to resolve issues pertaining to the issuance of Letters of Credit (LoC) for the importation of buses utilized for public transportation and lorries and trucks required for special purposes on which import restrictions were eased recently.

The State Minister said he is ready to work towards resolving the issue related to the international recognition of Sri Lanka’s Letters of Credit.

State Minister Siyambalapitiya made the remarks during a discussion with vehicle importers. 

Vehicle importers have pointed out that Sri Lanka’s Letters of Credit are not being recognized internationally due to the various measures that were taken earlier to mitigate the economic crisis. 

They further stated that even though the government had eased import restrictions on certain vehicles recently, issues have cropped up while attempting to import the vehicles.

Responding to the concerns, State Minister Ranjith Siyambalapitiya assured that a discussion will be held with the Central Bank of Sri Lanka and other relevant institutions to resolve the issues.

The State Minister added that they will look into the possibility of issuing government guarantees for the relevant Letters of Credit. (NewsWire)

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