In his Budget speech, Finance Minister P Chidambaram said: "Excise duty of one per cent, called National Calamity Contingent Duty, is now imposed on polyester filament yarn, which is the only yarn suffering this excise duty. I propose to remove that duty and shift the levy to cellular mobile phones."
"It will definitely increase the prices of mobile phones," LG Business Group Head (GSM) Anil Arora said when asked about the impact of the proposed move.
The proposal may translate into a corresponding one per cent hike in price of mobile handsets. However, a full impact of this needs to be reviewed, a Nokia spokesperson said.
Echoing similar sentiments, Indian Cellular Association President Pankaj Mohindroo said the proposed move of levying one per cent excise duty would increase the prices of mobile phone sets.
When asked how much the prices would go up, he said, "The price rise will not be killing... it will be minimal."
Global cellular handsets majors Nokia, Samsung, Motorola and LG have their mobile manufacturing plants in India.
On the other hand, much to the delight of prospective small car buyers, leading manufacturers Hyundai Motor India and General Motors on Friday said they would slash prices by up to Rs 16,000 to pass on benefits from the excise duty cut announced in the Budget.
Finance Minister P Chidambaram, in his Budget speech, has proposed to cut excise duty from 16 per cent to 12 per cent on small cars.
"We have decided to pass on the benefit of the excise duty cut to customers on three models Santro, i10 and the Getz--effective April 1," a Hyundai official said.
The price cut on Santro could be between Rs 12,000 and Rs 14,000, while that on Getz would be between Rs 14,000 and Rs 16,000.
Price cut on the newly launched i10 could be between Rs 12,000 and Rs 16,000, the official added.
General Motors is also cutting he price of its small cars Spark and Aveo U-VA.
"We will be cutting the prices of our small cars between Rs 7,500 and Rs 14,000," GM India Vice-President P Balendran said.
Meanwhile, rival Maruti officials said the company was studying the impact of the excise cut before taking any steps.