MUMBAI, Dec 8: India’s leading carmakers, Maruti Suzuki India Ltd and the local unit of South Korea’s Hyundai Motors , said on Monday they had cut prices following a reduction in taxes.

Maruti, 54.2 per cent owned by Japan’s Suzuki Motor Corp and the top Indian car producer, said it had slashed prices by 6,500 rupees ($131) for its top-selling Maruti 800 small car to 23,000 rupees for the premium SX4 sedan.

The government on Sunday announced an across-the-board 4 per cent cut in the central value-added tax on all products other than petroleum, as part of a fiscal stimulus package to revive sluggish demand.

Hyundai Motor India Ltd, India’s second-largest carmaker and fully owned by the South Korean firm, said it had passed on the full benefits of the tax cut to customers.

Its reductions, effective immediately, range from 8,834 rupees for the basic Santro, to 44,792 rupees for the premium Sonata, Hyundai said in a statement.

India’s automobile sector has been hit by a potent mix of liquidity crunch, high borrowing costs and a slowing economy.

Hyundai’s domestic sales fell 23.3 per cent in November, though robust exports helped it notch up a 49 per cent jump in total sales. Maruti’s sales fell 24.4 per cent in the month from year ago.—Reuters