New Delhi is considering a diplomacy drive to get Sri Lanka to bring down import duty on automobiles from New Delhi.
Sri Lanka had increased tariffs on imported vehicles earlier this year, which has sharply affected export of vehicles to the island nation.
"There are many options.
"One option is to approach purely diplomatically, and request the Sri Lankan government because it is a win-win situation if they cut down the tariff," said Rajeev Kher, additional secretary, Ministry of Commerce, on the sidelines of a Ficci conference.
"Sri Lanka is a very important market as far as cars and commercial (vehicles) are concerned.
"Obviously, we are concerned about it.
"We believe that the substantial rise in import tariff in Sri Lanka is going to adversely affect our car exports to that country."
Recently, the neighbouring country has increased import duties on vehicles by almost 100 per cent, which has adversely impacted exports from India.
Vishnu Mathur, director general, Society of Indian Automobile Manufacturers (Siam), said, "Last year, India had exported vehicles worth $6 billion, out of which automobiles worth $800 million had been sold in the Sri Lankan market.
"Now this has almost gone."
Earlier, the increase in duties affected exports of small cars, two-wheelers and three-wheelers.
"Just two weeks ago, they had increased duties on sports utility vehicles as well," he added.
Mathur said SIAM had planned to host an auto expo in the country but "we have postponed it, keeping the situation in mind".