China tops India as Main Exporter to Sri Lanka
The changes in taxation and leasing policies have resulted in a drop in imports of vehicles, including cars and three wheelers, which contributed to a significant portion of imports, along side petroleum products, from India. This has allowed China to become the country’s largest single import source in 2016. Chinese imports jumped 13.6% to 21.7% of total import expenditure, accounting for USD $4,215Mil according to Central Bank statistics—India contributed to 19.7% of imports, accounting for USD $3,815Mil, which is a decline of 10.6%. Main imports from China include textiles, machinery and equipment, chemical products, and building material transport equipment.
A Free Trade Agreement is expected to be signed between China and Sri Lanka, with the 5th round of negotiations having been held in Colombo. The negotiations dealt with several issues, including trade in goods, trade in services, investment, rule of origin and several other related matters.
Chinese vehicle manufacturers may be eyeing at the opportunity to further increase exports to Sri Lanka as new brands have been slowly entering the market. The stigma regarding the quality of Chinese vehicles still exists within the passenger car segment, but may see a change as higher quality products enter the market. Commercial vehicle segments do not share this stigma with many major Chinese commercial vehicle manufacturers already having established positions in the country.
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