The Cabinet has approved the lifting of the vehicle import ban starting from February next year. The ban will be lifted in phases beginning on October 1, 2024, according to a statement from the Presidential Media Division.
Minister of Foreign Affairs, Ali Sabry, stated that this decision was made by the Cabinet in light of improvements in the country’s foreign reserves and the strengthening of the Sri Lankan Rupee.
He further explained that this is part of the government’s efforts to restore the economy and meet public demand.
Accordingly, the importation of motor vehicles and non-mechanical motor vehicle spare parts classified under the 304 HS code will be allowed in three phases:
Phase 1: Beginning on October 1, 2024, the importation of public passenger vehicles, special-purpose vehicles, and non-mechanical motor vehicle spare parts will be permitted.
Phase 2: Starting December 1, 2024, the importation of vehicles used for commercial or freight transport will be allowed.
Phase 3: From February 1, 2025, the importation of private motor vehicles (including cars, vans, and sports utility vehicles) will be permitted.
The Cabinet announcement also mentioned that this phased reintroduction of vehicle imports is expected to address issues such as fuel inefficiency and rising maintenance costs associated with the continued use of older vehicles in the country.
Due to the prolonged import restrictions, Sri Lanka currently has a large fleet of aging vehicles, leading to concerns over fuel inefficiency, road safety, and environmental impacts.
Allowing new vehicle imports is expected to boost economic activity and increase government revenue, as vehicle imports have traditionally been a significant source of income.
However, since vehicle imports impact the country’s foreign exchange reserves, measures such as additional import taxes have been introduced to manage the situation.
The decision also takes into account Sri Lanka’s commitment to the Paris Agreement and its “Nationally Determined Contributions (NDCs)” to meet climate goals, including achieving net-zero emissions by 2050. The new vehicle import policy focuses on environmentally friendly vehicles and requires compliance with Euro 4 to Euro 6 emission standards.
Additionally, the government is promoting the use of electric vehicles. By 2029, the import of petrol or diesel-powered three-wheelers will be banned, and the conversion of existing vehicles to electric power will be encouraged.
In Sri Lanka, an average of approximately 30,087 road accidents occur annually (mainly involving motorcycles and three-wheelers), and the government has included safety measures in its vehicle import policies to help reduce these accidents.
Under the new framework, motor vehicle imports will be limited to newer models. Specifically, motor vehicles and sports utility vehicles (SUVs) less than three years old and public transport and commercial vehicles less than five years old will be allowed for import. For special-purpose and security vehicles, imports will be allowed up to ten years old. Importers must register and sell these vehicles within 90 days, with penalties imposed for delays.
Furthermore, an annual licensing system will be introduced to regulate vehicle and spare parts importers, vehicle assemblers, and dealers.
As part of Sri Lanka’s ongoing program with the International Monetary Fund (IMF), this phased resumption of imports is expected to help the country meet financial targets while generating additional revenue through import taxes.
