Less than a day after Finance Minister Pranab Mukherjee announced cuts in excise and customs duties, some automobile and consumer durables firms agreed to pass on the full benefit to customers.
On Monday, the additional excise duty on large passenger vehicles was brought down to Rs 15,000 from Rs 20,000, while customs duty on LCD panels was halved to 5 per cent from 10 per cent.
Auto players such as Mitsubishi, Ford, Toyota, General Motors and Mahindra & Mahindra, and Samsung and LG from the consumer durable industy all said they will pass on the benefit to the customer.
The Budget directed a cut of Rs 5,000 in excise duty on all passenger vehicles with engines larger than 2000cc. As 70 per cent of sales in passenger vehicles comes from the small car segment, few vehicles qualify for the benefit.
All sedans, which have powerful engines, and all the sports, utility and multi-purpose vehicles will get the benefit.
As a result, many car lines, including Mitsubishi's Outlander, Pajero and Montero, Ford's Endeavour, Toyota's Camry and Innova, General Motors' Tavera and vehicles from Mahindra & Mahindra have become cheaper.
Sandeep Singh, deputy managing director (sales and marketing), Toyota Kirloskar Motors, said: "We have decided to pass on the full benefit of the excise duty cut to the customer. Our models will have revised prices."
Mahindra & Mahindra will also reduce rates of its popular models; how much is yet to be decided. The Xylo, Scorpio and Bolero qualify for the benefit. A year earlier, former finance minister P Chidambaram had specified additional excise duty of Rs 15,000 on all passenger vehicles with engines more than 1500cc but less than 2000cc, and Rs 20,000 on all vehicles with more than 2000cc engines.
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showroom prices. The company has not given the exact prices after the cut.
This step was primarily taken to discourage purchases of bigger vehicles, for reasons of fuel efficiency.
Likewise, Samsung Electronics has decied to cut the prices of its large format display monitors between Rs 1,200 and Rs 3,500. "The Samsung 32-inch LFD monitors will get cheaper by Rs 1,200, the 40-inch LFD monitor by Rs 2,000 and the 46-inch LFD will cost about Rs 3,500 less," said a Samsung India spokesperson.
The company is also considering revising the prices of LCD TVs. A Samsung 32-inch LCD TV costs about Rs 38,000, with prices touching Rs 2,85,000 for 52-inch models.
The company spokesperson reasoned, "Since Samsung is running a promotion on its LCD TVs where an Airtel set-top box is bundled along with the panel, we will not be reducing the prices in the month of July."
Globally, LCD TV, monitor and notebook panel prices had increased significantly on tight supply, with suppliers aiming at profits for the third quarter of 2009, according to a report from DisplaySearch.
LG, which had around 23 per cent of the LCD TV market in India last year, had hiked its LCD panel prices on July 1.
An LG India spokesperson said: "We had raised the LCD panel pricing by 5 per cent on July 1, due to a steady rise in global LCD panel supply. But with the Budget reducing the customs duty by half, we intend to scale back the earlier price hike."
An unresolved panel shortage, primarily the result of insufficient supply of glass substrates, is forcing the world's major panel makers to raise prices more aggressively, as they hoped to end several quarter losses in the July-to-September period.