If royalty rates fall 150-200 basis points (bps) from the current 5.3 per cent of sales, the operating profit margins, according to analysts, will improve 40-50 bps over the next couple of years. HSBC estimates at least 25 per cent of Maruti's sales in FY19 should have a lower royalty. The new rate will be an addition to an existing arrangement, which reduces royalty in line with Maruti's contribution to research and development (R&D) of the vehicle, as was the case with the Brezza.