Prices of two-wheelers are set to rise across-the-board following the announcement of a 1 per cent contribution towards calamity contingency fund in the recent Union Budget.

This works out to a hike of around Rs 250 on 2-stroke scooters and between Rs 300-600 on motorcycle prices.

While the price hike has not been effected so far, most companies are expected to take a decision during this week. When contacted, senior executives at Hero Honda said they were expecting a decision on the price hike in a couple of days.

Sources at Bajaj Auto and Kinetic Engineering said the entire additional burden may be passed on to the consumer.

An industry source said: "When there is a reduction in excise, we pass on the benefit to the customer, so it doesn't make sense for us to take the hit when there is an increase in levies."

However, even as the Union finance minister has announced a 2 per cent reduction in central sales tax, there may not be any reduction in prices of most two-wheeler products, auto analysts said.

This is because CST is levied only on direct sales to the dealers outside the state of production. It is not applicable if companies operate sales depots (outside the state of manufacture), which then delivers the products to the dealers.

Also, two-wheeler companies are waiting for the state budgets, as these budgets will announce the implementation of value added tax.

The impact of VAT on prices in different states is still being worked out by auto companies.