Sri Lanka has imposed a temporary 50 per cent surcharge on Customs Import Duty for a wide range of imported motor vehicles to protect foreign exchange reserves and ease pressure on the country’s external sector. According to the Finance Ministry, the surcharge came into effect today for a period of three months and applies to both general and preferential import duty categories. The measure covers buses, passenger cars, hybrid and electric vehicles, ambulances, motorhomes and other specialised vehicles across different engine capacities and age classifications. Authorities said Letters of Credit opened on or before May 15 will remain exempt from the surcharge.

Sri Lanka had eased its near-total ban on vehicle imports last year after imposing strict restrictions during the 2022 economic crisis. The crisis had led to severe foreign currency shortages, debt default, soaring inflation and fuel scarcity across the island nation.

The latest move is expected to curb rising import demand and help preserve external sector stability under the country’s IMF-backed recovery programme. However, industry representatives have warned that the surcharge may further increase vehicle prices and slow growth in the automobile and transport sectors.

The Vehicle Importers Association of Sri Lanka has said the decision could raise car prices by at least 1.5 million Sri Lankan rupees, affecting affordability for consumers. Meanwhile, former minister Ali Sabry has supported the government’s decision, calling it a prudent step to safeguard the country’s fragile economy amid global instability.