The Indian government on Sunday announced an across-the-board cut in the ad valorem cenvat (central value added tax) rate on all products other than petroleum and products where the rate was already less than 4 per cent.

'Tata Motors will pass on to customers the benefit that will come in through the cut in cenvat. This is across products - passenger and commercial vehicles,' the company said in a statement. The details were still being worked out, it added.

Separately, top car maker Maruti Suzuki Ltd's chief said on television the reduction in cenvat would lead to a reduction in car prices by 4 per cent.

'So far as I understand it, it will be applicable on all products, and it should be applicable to automobile manufacturers too,' Chairman R.C. Bhargava told CNBC Television 18.

'It will be passed on to the customers.' India's automobile sector has been hit by the global and local liquidity crunch, rising interest rates and a slowing economy.

Maruti's November car sales fell 24.4 percent from a year ago, while Tata's vehicle sales were down 30 per cent. -- REUTERS