Shares in Mahindra and Mahindra, India's largest utility vehicle maker, rose as much as 1.8 per cent, while shares of Hero MotoCorp, the country's largest two-wheeled vehicle maker, jumped as high as 4 per cent.
The FM. proposed reducing the excise duty on small cars, two-he wheelers and commercial vehicles to 8 per cent from 12 per cent.
The duty on sport-utility vehicles would fall to 24 per cent from 30 per cent, while for large and medium-sized cars it would drop to 24 per cent and 20 per cent, respectively.
Car sales fell 7.6 per cent in January, the fourth consecutive month of declines, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) as consumers kept a tight lid on spending, hurt by high interest rates and fuel costs in a slowing economy.
Utility vehicles were a bright spot in the auto market a year ago, but an increase in factory gate duties and rising prices of diesel, which is commonly used to power such vehicles, has hit their sales as well.