Maruti Suzuki India, the country's top carmaker by volume, will increase car prices by 4 per cent following the government's decision to halt tax breaks to automakers beyond December 31, a company executive told Reuters on Tuesday.
A tax break was first granted in February last year to revive sluggish car sales and later extended until the end of 2014.
Automakers had been hoping the concession, amounting to 3-6 per cent of the price of a car before the imposition of all duties, to continue in the new year.
"Whatever excise duty hike has happened from the government's side we are passing that on to customers," said RS Kalsi, executive director at Maruti, which is majority owned by Japan's Suzuki Motor Corporation.
The company was planning to increase prices this year to offset rising input costs, but Kalsi said the decision has been deferred because higher excise duty rates have already pushed up prices and another hike would further impact the market.