Multinational car companies such as Skoda Auto, Toyota, Honda, General Motors and Daimler Chrysler might cut the prices of certain models that have a low level of localisation as a result of the cut in peak custom duties on non-agricultural products from 20 per cent to 15 per cent.
Automobile industry men are positive that the across-the-board duty cut includes imported auto components.
Most companies are still grappling with the intricacies of the duty cut, trying to figure out whether it includes sub-assemblies such as engine and transmissions, before announcing any price cuts.
Imran Hassen, managing director at Skoda Auto, said that the company was still waiting for further clarity on the duty cuts and would study the overall impact of the Budget before taking a decision on price cuts.
A senior official at General Motors also said the company was trying to understand the impact of the announcement and what it will translate into in the light of the steel excise duty increase.
A Daimler Chrysler executive said that the company would use the duty cut benefit to offset the impact of the increasing value of the Euro on its margins.
If sub-assemblies come under the purview of the duty cut, it could translate into big cost savings for these multinational car companies as engine and transmission account for nearly 33 per cent of the cost of the car.
On the other hand, an excise duty cut from 24 per cent to 16 per cent aimed at the tyre industry has failed to bring much cheer to consumers as industry players and analysts feel it is unlikely that the benefit of the duty cut will be passed on.
Sunam Sarkar, chief of strategy and business operations at Apollo Tyres, said that it was too early to comment on the impact, but it was unlikely that the excise duty cut would cover the extent of input cost hikes over the last few months.
"Tyre companies may be forced to reduce prices by around 5 per cent as of now," said an industry observer.
Meanwhile, prices of tractors with a capacity of over 1800 cc could become rise by up to Rs 30,000 due to the 16 per cent duty on "road tractors" proposed.
The industry is confused over the introduction of excise duty on road tractors and seeking clarification on the definition of the term. Over 80 per cent of the 245,000 tractors produced in the country every year are over 1800 cc capacity.
The industry fears that the definition might be stretched to include all tractors including those used for agriculture purpose.
"Most tractors are used for both agriculture and haulage purposes. Moreover, manufacturers, at the time of selling would not know for what purpose the tractor is purchased." said R C Jain, president of Tractor Manufacturers Association.
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