NEW DELHI/MUMBAI: Finance Minister P Chidambaramopened up an unexpected four month window of lower excise duties that could bring down prices of SUVs by Rs 37,000, sedans by Rs 26,000, two-wheelers by Rs 1,700 and also make dozens of consumer electronics, home and kitchen appliances cheaper by Rs 250-1,000. Indirect tax rates are generally left untouched in a vote-on-account.

But Chidambaram announced several cuts arguing that the current economic situation demanded some interventions that could not wait for the regular budget. The automotive sector, which Chidambaram said is registering unprecedented negative growth, was the biggest beneficiary. The FM cut excise on small cars and two-wheelers from 12% to 8% and on SUVs from 30% to 24%. The duties on large and mid-segment cars were cut from 27% and 24% to 24% and 20%, respectively. These are the widest range of tax cuts in the past six years.

The next government, which will announce the full budget in June, will decide if it wants to continue with these excise duty cuts. “The budget won’t impact overall weakness in the economy but it will surely help spur consumption growth due to excise cuts in various sectors,” said Adi Godrej, chairman of the Godrej Group and past president at CII (2012-13).

“If this (excise cuts) is not enough we are in serious trouble,” said Pawan Goenka, ED, M&M. “This is astimulus package and a shot in the arm for the next four months.”

“We hope this benefit will continue beyond June 30,” said BS Seo, MD and CEO of Hyundai Motor India. “This will improve affordability and thereby demand.”

The FM also gave respite for many consumer durables, including home and kitchen appliances and electronics. With excise duty cut from 12% to 10%, dozens of appliances will see prices drop marginally.

“There will be a small cut in prices, which is a welcome change since the market has been impacted with recurrent price increases last year due to rupee depreciation and increase in commodity prices,” Panasonic India Managing Director Manish Sharma said. Low-end mobile phones priced below Rs 2,000 will, however, become marginally more expensive.

The FM restructured excise duty to spur local manufacture of cellphones, but in the absence of a manufacturing ecosystem, prices will go up marginally.

Karbonn Mobile, India’s thirdlargest smartphone maker, will immediately increase prices by a minimum of Rs 135-140 for its handsets priced under Rs 2,000.