Maruti Udyog Ltd, India's largest carmaker, will increase prices in April due to rising input costs, especially steel.

The company decided to hike prices at a top-level meeting last week. It was getting extremely difficult to absorb increasing input costs, company sources said in Delhi.

Though the quantum of the hike is yet be decided, it is likely to be in line with the increase in input prices in the past few months.

According to an estimate, input costs have gone up 3-4 per cent for compact cars like MUL's Wagon R and Hyundai's Santro.

MUL's arch rival Hyundai Motor India (HMIL) has also announced it would raise prices in April.

Prices of steel and other bulk inputs shot up in the last couple of months and a price increase on vehicles has been widely expected for some time.

So far, auto-makers, with the possible exception of utility vehicle maker Mahindra and Mahindra, have not tinkered with prices and have absorbed costs.

With spiralling steel and other input costs, carmakers are feeling the pinch in terms of squeezing margins.

Car companies were currently finalising fresh long-term contracts with suppliers for the next fiscal, industry observers said.

Rising input prices at this juncture was a major concern for companies like MUL and Hyundai, they said.

Last week, the Society of Indian Automobile Manufacturers (SIAM), Automotive Component Manufacturers Association (ACMA) and Indian Steel Alliance (ISA) mooted a five-point agenda to gauge and mitigate the impact of rising steel prices.

ISA members agreed to enter into quarterly or even half-yearly contracts with automobile manufacturers to avoid fluctuations in steel prices.