P. K. Bhardwaj

NEW DELHI: The auto industry as well as prospective buyers of small and imported cars have a lot to cheer about. Within minutes of Finance Minister P. Chidambaram announcing a reduction in excise duty from 24 to16 per cent in the Union budget on Tuesday, several manufacturers slashed the prices of small cars by about Rs. 13,000-23,000.

Makers of imported cars said they would pass on the benefit of lowering of the peak import duty to buyers.

While the manufacturers are excited at the prospects of the excise duty cut spurring sales, prospective buyers are impressed with the substantial reduction in prices.

Mr. Chidambaram defined a "small car" for the purpose of reduced levy as a vehicle not exceeding 4,000 mm in length and with an engine capacity not exceeding 1,500 cc for a diesel car and 1,200 cc for a petrol car. He said the industry would seize the opportunity to make India a hub for manufacture of small and fuel-efficient cars.

The country's car major, Maruti Udyog Limited, reduced prices by between Rs. 13,000 and 22,000 for five models including M800 and Alto. Its principal competitor Hyundai announced a Rs. 23,000-cut in the price of its flagship Santro from Wednesday.

Tata Motors said it would reduce the prices of some of its cars including the hatchback Indica. "We will be reducing the price" and "exact details are being worked out."

Honda is the first among the carmakers using imported components to indicate that cuts in prices ranging from Rs. 2,000 to 10,000 will be announced shortly.