Hi Sunil, Congrats on the new car (in advance!)
K&N Filter: It reduces the restriction on the air path to the engine, and results in more air sucked in the cylinders. So there is some power improvement.
K&N is not like your regular filter which is disposable, and available somewhere in sub-1k Rs. range. The paper filter is required to be REPLACED periodically. On the other hand K&N filter uses a sponge-llike filter that has to be cleaned and oil impregnated. This procedure is tedious and subject to quality variations in servicing - not a good thing!
Most of all the filtering provided by K&N filter is reported to be inadequate. This means dirt can be sucked in the engine, and scour the cylinder walls etc, resulting in damage to them - this can result in loss of FE, power and other issues gradually cropping up. This is the worst part of the K&N filter use.
I don't know if replacing the stock filter by something like K&N is allowable in a new car - you risk voiding the warranty. Check with the dealer about this issue.
My personal opinion - this upgrade is not worth the downsides and hassles involved.
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