"There would not be much effect of the Budget on the passenger car industry in terms of excise duties, but some cost impact on raw materials will be there", BVR Subbu, director marketing Hyundai Motor India told The Financial Express.

A final picture will emerge only later as the impact is being worked out", another leading manufacturer said. The industry experts stated that they were still assessing the impact and a final picture would emerge only later. The industry as a whole will be adversely hit by the new excise structure.

The non-modvatable component of the excise duty stands increased for all categories of vehicles, which may adversely impact the prices, and is likely to indirectly hit the auto component industry. There would be no impact on the passenger car industry with excise duty remaining at 40 per cent (16 plus 24). The multi-utility vehicles would however be adversely affected with the increase in excise duty from 30 per cent to 32 per cent.

On the whole, the Budget is neutral for the auto component industry and negative for the automotive industry in general.

The Modvatable component for all the auto sectors have been reduced. In other words, only the 16 per cent VAT is Modvatable and not the entire excise duty of 40 per cent on cars. The auto component industry maintains a status quo in the Budget 2000-2001, and no sector specific thrust or focus has been accorded to the automotive industry in the first budget of the new millennium, V K Mehta, president Automotive Component Manufacturers Association said.