Fishermen had won the freedom to import boats freely after a tsunami hit the island in 2004 devastating their lives and livelihoods.
"The duty free boat imports were allowed by the government in the aftermath of the Tsunami to re-build the fishing industry," industries minister Rishad Bathiudeen was quoted as saying in a statement.
"But this has now adversely affected the overall boating industry since many vessels, including sub-standard boats, are imported duty free, dealing a blow to our 500 million dollar boating industry’s competitive advantage."
The proposed taxes on boats are the latest in a series of trade restrictions imposed on citizens of Sri Lanka in recent years, with a resurgence of nationalism including economic nationalism in the island.
In recent years politically connected industrial oligarchs have also scuttled a deal to expand trade freedoms between Indian and Sri Lankan citizens.
Many Sri Lankan fishermen are poor and especially those in the north and the east of the island are just re-building their lives after 30-year of war.
The so-called ‘infant industry’ arguments were originated in the US by Alexander Hamilton, who was finance secretary in a cash-strapped fledgling Federal government.
The idea spread in Europe via Germany by Frederick List. Later the argument was pushed to agriculture by other Germans such as Adolf Wagner.
Proponents expected ‘infant-industry’ protection to be temporary.
Because protection enriches industrialists by tax arbitrage, there is no real incentive for infant industry to compete in foreign markets and critics say they usually become ‘geriatric industries’ that live off the misery of the poorest sections of society permanently.
But fortunately for Germany when protection came in the middle of the 19th century, her firms were already successful exporters. Economists say they also used profits unjustly gained from helpless local customers to subsidize foreign buyers and expand markets.
Germany however finally abandoned nationalism and became a liberal nation after National Socialists led the country into World War II amid discrimination against minority Jews.
But ever since, special interest groups have successfully used nationalist arguments to unjustly enrich themselves in countries where citizens can be easily cheated out of their freedoms.
The industries ministry said there were 25 active boat yards in Sri Lanka producing various types of boats and about 7 boat yards currently export their products. Boat exports had grown from 59 million US dollars in 2010 to 149 million US dollars, the industries ministry sid.
North Sails, an international firm had opened a factory in the Biyagama export manufacturing zone.
From the 1980s Sri Lanka established free trade zones where export firms with foreign investment set up shop without oppressing domestic consumers.
Solas Marine, Dubai-controlled boat builder, Lanka recently won a large order to supply 80 fast interceptor boats to the Indian government.
Colombo Dockyard, shipbuilder controlled by Japan’s Onomichi Dockyard is also building supply vessels for foreign customers and military patrol boats.