Auto industry not a cash cow for revenue collection was the key message delivered by business leaders as they urged the Government to adopt a long-term industrial strategy instead of relying on the automotive sector to achieve short-term fiscal targets.
Auto industry not a cash cow for revenue collection, Chamber tells Government
Addressing the Annual General Meeting of the Ceylon Motor Traders Association (CMTA) in Colombo last Friday, Ceylon Chamber of Commerce Secretary General and CEO Shiran Fernando said Sri Lanka must fundamentally change the way it views the Sri Lanka automotive industry, positioning it as a driver of industrial development, innovation and employment rather than merely a source of customs revenue.
Fernando argued that policymakers have historically taken a narrow fiscal approach to the sector, frequently increasing vehicle-related taxes whenever the Government seeks to boost revenue collection. While such measures may generate short-term income, he warned that they also create uncertainty for businesses, discourage investment and weaken long-term industry growth.
According to Fernando, repeated tax hikes and ad hoc policy decisions have prevented the automotive sector from realising its broader economic potential. Instead of treating vehicle imports and related businesses as convenient revenue sources, he said the Government should recognise the industry’s capacity to contribute to manufacturing, technology transfer, skills development and value-added production.
With Sri Lanka gradually reopening vehicle imports following the prolonged import restrictions, Fernando stressed that this presents a timely opportunity for the Ceylon Motor Traders Association and its members to reposition the industry. He encouraged motor traders to move beyond traditional trading activities and establish a stronger presence in vehicle assembly, component manufacturing, after-sales services and technical training.
“The association needs to strategically pivot away from this mindset and demonstrate to the government how it can be a true partner in value creation and overall industrial development,” Fernando said.
He noted that Sri Lanka remains in the early stages of developing a modern automotive ecosystem. Expanding local assembly operations, strengthening component manufacturing and investing in skilled technical personnel could significantly enhance the competitiveness of the Sri Lanka automotive industry while creating new employment opportunities.
Fernando also highlighted the importance of vocational education, suggesting that the sector could leverage existing technical and vocational training institutions to build a highly skilled workforce capable of supporting future industry growth. Developing local expertise, he said, would reduce dependence on imported technical skills while improving productivity across the sector.
Electric mobility was another area identified as a major opportunity. Fernando urged businesses to actively embrace the global transition towards cleaner transport technologies, arguing that the automotive sector could become a leading contributor to Sri Lanka’s sustainable development agenda.
Drawing comparisons with regional success stories, he pointed to Vietnam’s experience in attracting Samsung as an anchor investor, which helped transform the country’s export sector and generate extensive supply chain development. Fernando suggested that Sri Lanka could pursue a similar strategy by creating a stable and predictable policy environment capable of attracting large-scale automotive investments.
Beyond industrial expansion, he encouraged businesses to place greater emphasis on climate adaptation rather than focusing solely on emissions reduction. While vehicle electrification remains important, Fernando argued that preparing businesses for climate-related risks would improve long-term resilience and open access to new sources of international financing.
He said multilateral institutions such as the Asian Development Bank and the World Bank continue to expand funding for climate adaptation projects, creating opportunities for industries that integrate resilience into their long-term business strategies.
According to Fernando, securing adaptation finance could help businesses strengthen operations while supporting the country’s broader economic resilience. Such investments, although not always immediately reflected in financial performance, would position companies for sustainable growth amid changing environmental conditions.
Fernando concluded that disruption within the automotive sector is no longer a future possibility but an existing reality, citing the five-year vehicle import ban as clear evidence of how rapidly market conditions can change. He reaffirmed the Chamber’s commitment to working closely with the Ceylon Motor Traders Association to advocate for policy reforms that encourage industrial development rather than short-term revenue collection.
Ultimately, he said the future of Sri Lanka’s automotive sector will depend on consistent policies, stronger public-private collaboration and greater investment in manufacturing, innovation and workforce development. By embracing these priorities, the industry can evolve into a strategic economic partner capable of supporting sustainable national growth instead of being viewed merely as a source of government revenue.