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- By Parinda News Bureau, February 28, 2006, 16:38 IST
MUMBAI : Immediately after the Finance minister proposed a cut in duty on small cars in the budget for the year to March 2007, shares in Indian auto makers surged.
Palaniappan Chidambaram lowered the excise duty on small cars to 16 percent from 24 percent to promote India as a hub for small cars, sending shares in top car maker Maruti Udyog Ltd. up by nearly 6 percent to a record 834.20
rupees.
Maruti, in which Japan's Suzuki Motor Corp. owns 54.2 percent, said it would cut prices on five models by 13,000 rupees to 22,000 rupees as a result of the duty cut.
"We will pass on the entire benefit to our consumers," Managing Director Jagdish Khattar told a television news channel.
"This will bring a change in the auto industry ... penetration will increase," he said.
Small cars make up more than three-fourths of car sales in India every year, but only eight in 1,000 people owns a car.
Shares in Tata Motors Ltd., India's number three car maker, rose nearly 4 percent to an all-time high of 816 rupees.
Korea's Hyundai Motor Co., India's second-biggest car maker, said it would cut the price of its best-selling Santro hatchback by 23,000 rupees.
The budget also proposed cuts on key raw materials including steel, plastic and aluminium, boosting shares in bus and truck maker Ashok Leyland Ltd. by 1.5 percent to 38.50 rupees and TVS Motor Ltd., the number three motorcycle
producer, by nearly 2 percent to 120.30 rupees by 0900 GMT.
The benchmark BSE index was up 1.17 percent at 10,401.98 points.
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