The top Indian motorcycle and car makers – Hero Honda Motors and Maruti Udyog – boosted vehicle sales in July, along with their competitors, as cheaper borrowing costs and tax cuts prompted more purchases, a Bloomberg News report said.

Local vehicle sales increased 17% in July to 524,605 units from 449,554 a year earlier, the report said, citing the monthly statement by the New Delhi-based Society of Indian Automobile Manufacturers.

Exports in July almost doubled to 40,454 units from 21,812, the trade group reportedly said.

Bloomberg News said rising incomes in urban India and cheaper borrowing costs are stoking demand for cars and sport utilities in Asia’s third-biggest economy, behind Japan and China, and boosting the sales of companies such Maruti and Hero Honda.

“You don’t need to go beyond interest rates and infrastructure to see why the industry is growing,” Gul Tekchandani, who manages the equivalent of $US100 million of Indian stocks, including some of the automobile companies, at Sun F&C Asset Management Pvt. at Mumbai, told the news agency.

The report said the Reserve Bank of India’s key bank rate, the rate at which the central bank lends to other commercial banks, is at a three-decade low of 6%, enabling consumers to get cheaper credit from banks.

Local car sales in July gained 38% to 59,800 units from 43,434 while sales of two-wheeled vehicles increased 13% to 406,157 units from 360,040 and truck and bus sales rose 44% to 19,280 units from 13,405, Bloomberg News said.