Car prices are widely expected to edge up by around 2% after the Indian government increased excise tax on cars.

Carmakers said they would raise prices after after Finance Minister Pranab Mukherjee said in his budget speech Friday that the government will raise the base excise tax applying to cars and motorcyles to 10% from 8%.

The move by the Indian government is seen as a partial reversal of the incentives provided last year to support the economy.

However, analysts in India say that the measure is unlikely to lead to a major slowdown in car market growth and that automakers may be relieved that taxes weren't raised by a higher margin.

Market leader Maruti Suzuki said it raised prices between 3,000 rupees to 13,000 rupees across various models, with immediate effect.