"One of the options is to approach purely diplomatically, and request the Sri Lankan Government because it is a win-win situation if they cut down the tariff."
Small cars made in India and Malaysia had helped improve living standards of Sri Lankans. The cars also brought billions of rupees in revenues to Sri Lanka's high spending state which runs large deficits.
After the prohibitive tax hikes revenues fell as analysts had warned that it would.
Taxes were raised twice in 2012 after Sri Lanka's monetary system ran into balance of payments trouble due to a steep rise in bank credit taken to manipulate energy prices which were in effectively accommodated by central bank credit though sterilized forex sales.
The report quoted Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur as saying that last year out of 6 billion US dollars of auto exports from India, about 800 million US dollars worth went into Sri Lanka.
"Now this has almost gone," he Mathur said.
Sri Lanka also imports three wheelers and motor bicycles from India.Another report said Chinese manufacturers are being allowed to set up assembly plants in Sri Lanka which could potentially export products to India without duty.
Under a free trade deal between the two countries India has cut taxes on a large number of products while nationalist business had placed a bigger negative list blocking the trade freedoms of Sri Lankans hitting the poor in particular.
Rent-seeking Sri Lankan businesses have placed a 'negative list' of 1,198 items on the Indo Lanka free trade deal while Indian authorities have allowed their businesses to block the trade freedoms of their citizens by only 196 items.
Local assembly or any protected domestic industry engage in tax-arbitrage collecting as profits what would have gone to the state as taxes, while keeping overall prices high for the general public, particularly the less well off.
There are however 'rules of origin' which can make re-exports of items without sufficient local content difficult.
Analysts say 'rules of origin' themselves are a protectionist legacy in areas with free trading peoples and global supply chains.
In areas where people are winning more trade freedoms from rulers and nationalist businesses such as East Asia and the US, global supply chains have sprung up and business are forced to keep quality up and prices down allowing people to move out of poverty quickly.
Sri Lanka has a system of taxation where duties are hatched secretly and jacked up by midnight gazette literally while citizens are sleeping, violating the principle of 'taxation by consent' established through the Magna Carta of England which set the foundation for liberty of the citizen and the restraint on rulers.