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Small cars to be cheaper by Rs 32,000

NetScribes / Mahesh Shetty

If car makers pass on the 8 per cent cut in excise duty to their customers, car prices could fall by Rs 32,000 in the small car segment and by Rs 48,000 in the mid-size segment.

"This is good news by any standards. Small car prices are going to fall by Rs 25,000-30,000. Mid-size cars have it even better, with an expected price drop of almost Rs 45,000-50,000," said Ashish Parab of Shaman Auto, a Fiat dealership in Bombay.

Analysts said that given the present depressed state of the auto market, manufacturers would have to pass on the tax benefits. Car makers are expected to pass on all or most of what they get as savings in the cost of production after the excise cut is effected.

"This one is a feel-good Budget. If nothing else, it will improve sentiment in the auto industry," said Bobby Surendranath, fund manager at Zurich India Mutual Fund.

In the run up to the Budget, the Society of Indian Automobile Manufacturers (SIAM) had asked for a cut in the excise duty and an increase in the customs duty on the proposed auto imports.

The association had asked for a reduction in the excise duty on passenger cars from 40 per cent to 32 per cent - exactly what they got. The industry body had also asked for a similar duty reduction for utility vehicles from 32 per cent to 24 per cent. Also on the society's wish-list was a uniform central excise duty on all categories by 2003. The last two wishes didn't come true in this Budget.

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