Datanomics: India's rising car exports face fresh Lankan speed bump

After lifting its import ban in 2025, Sri Lanka has seen a sharp rise in vehicle imports, prompting a temporary surcharge to protect forex reserves and ease pressure on the external sector

Sri Lanka has imposed a temporary 50 per cent surcharge on imported motor vehicles to protect the country’s forex reserves and ease pressure on its external sector. The surcharge will be levied for three months and will cover buses, passenger cars, hybrid and electric vehicles, and other specialised vehicles. This comes after Sri Lanka lifted its near-total ban on vehicle imports in 2025.

 

Vehicle imports by Lanka peaked in 2025

 

In 2025, Sri Lanka imported vehicles worth $1.6 billion — the highest import value to date. The country imported vehicles worth nearly $460 million in the first three months of 2026 alone, rising by over 1,200 per cent year-on-year. 

 

Car export share to Lanka highest since FY17

 

India’s car export market expanded by over 23 per cent in 2025-26 (FY26). Sri Lanka’s share in India’s car exports rose to 2.73 per cent — the highest since FY17 — making it the sixth-largest export market for Indian cars. 

 

Car exports to Lanka rose 12 times in FY26

 

Cars accounted for 5.46 per cent of the total Indian exports to Sri Lanka in FY26 — the highest share since FY17. Further, motor vehicles were the fourth-largest exported product (by value) from India to Sri Lanka in FY26.