The FM has also been able to partially correct the inverted customs duty structure bringing down raw material rates to 10%, while the focus on agriculture and irrigation may benefit tractor sales. But the major disappointment has been the non-materialisation of the much-expected excise duty cut in passenger vehicles.

Excise duty on road tractors for trailers, with engine capacities of 1800 cc or more, has been hiked to 16%. To top it all, fuel prices are dearer by at least 50 paise pushing up cost of ownership. The industry, however, is playing down this aspect saying that economic growth will boost demand in the long run.

“There are many positives, like corporate tax cut, R&D benefits, reduction in input duties, emphasis on infrastructure, etc, that will provide a growth environment for the industry. However, the government may have lost an opportunity in addressing consumer needs as prices are set to increase because of the move to Euro III,” said Maruti Udyog MD and Siam president Jagdish Khattar.

Concurred Hyundai Motor president BVR Subbu, “It is economic growth and not excise duty cuts, that is the major demand driver.”

The 8% excise duty cut for tyres may bring some relief to the industry which is facing severe pressures on its margins. But industry are still debating the extent of the cut that can be passed on to the consumers.

“We are putting together all details to enable us to take a decision at the earliest,” was all Apollo Tyres COO Neerak Kanwar said. Sources at JK Tyres, however, said they are considering a 6% cut in prices. There was a mixed reaction from the auto component industry. “We are happy the inverted duty structure has been corrected. But the FM has not gone the whole way. We are still not near the Asean levels,” said Acma president Deep Kapuria.

Though the industry is still working out the impact of steel prices, sources say the hike in metal prices will neutralise the customs duty cut.