After receiving a boost in the recent Indian budget with a cut in excise duty, both Coca-Cola and PepsiCo have now announced price cuts on their Indian products.

The Indian Express has reported that PepsiCo is to cut the price on specific packs across its brands and Coca-Cola has announced an across the board reduction in prices, including Maaza with immediate effect.

In a statement, Sanjiv Gupta, senior VP of Coca-Cola India said: "The reduction in the prices of Coca-Cola India products varies from 7% to 10%, which is much higher than the effective rate of excise relief given to the industry."

He continued: "Bringing excise duty on aerated drinks in line with the similar industries is a step in the right direction and we welcome it."

For over four decades, soft drinks have been classified as luxury goods by the Indian government. But by reducing the duty for soft drinks from 40% to 32% (consisting of 16% special duty and 16% reimbursable excise duty) the government has now taken steps to rationalise excise duties against other products such as biscuits and bread.

No other mass produced food product in India carries an excise duty of more than 20% and so the disparity between excise duty charged for soft drinks and other food products remains high.

A reduction in abatement of the maximum retail price of soft drinks from the current 55% to 50% was also announced in the budget, which claims the Indian Express has affected the industry adversely.

"Bringing excise duty on aerated drinks in line with the similar industries is a step in the right direction and we welcome it. However, the reduction of abatement for the industry has been done without consulting the industry. The facts do not justify lowering abatement," said chairman of PepsiCo India Holdings, PM Sinha.

Besides central taxes, each Indian state also charges different state taxes for fruit juices and carbonated drinks and these can vary from between 0% and 20%. And Pepsi and Coca-Cola, which are currently responsible for almost 80% of soft drink bottling in India have seen excise duty be as high as 55%.

Pepsi has announced price cuts on its 2 litre, 1.5 litre, 1 litre and 200ml packs and Coca-Cola has also reduced the price of its 1 litre pack and 200ml pack size.

The Indian Express also reported that Pepsi has brought down the price of its juice drinks Slice and Mangola in 250ml packs.