By Archana Chaudhary/Bloomberg
Mumbai: Cement makers will meet Finance Minister P. Chidambaram on 22 March 2007 for the first time after they agreed to freeze prices for a year in a bid to end a row with the government over raised taxes.
“It will be primarily to discuss prices,” H.M. Bangur, vice-president of the Cement Manufacturers’ Association of India, said in a telephone interview from Kolkata. “We’re hoping the government will offer us something better in our meeting on 22 March.”
Cement company stocks surged on 20 March on speculation that the government may offer tax sops to producers to add capacity and end a demand-supply mismatch.
“We don’t know what is on the government’s mind, we are not seeking any sops,” said Bangur.
Companies such as ACC Ltd and Gujarat Ambuja Cements Ltd on 9 March agreed to hold prices for a year, even if input costs increase, at the behest of the government, which wants to curb inflation before key state elections.
Chidambaram on 28 February imposed a dual tax rate on cement in his budget to persuade companies to limit price increases. He increased the excise rate to Rs600 ($13.5) from Rs400 a tonne for cement sold at Rs190 or more for a 50-kilo bag. For cement priced below Rs190 a bag, the tax was cut to Rs350 a tonne.
Cement makers passed on the increase in duties to consumers on 5 March.
Cement companies agreed to pass on to customers benefits from any cut in the excise-duty proposed in the budget after India’s Commerce Minister Kamal Nath hinted at a potential ban on exports.
The government hasn’t given any assurances about duty cuts, Cement Manufacturers’ Association President Manoj Gaur said in a phone interview on 9 March.
Cement makers earlier said they will reduce prices only if Chidambaram reverses the tax increase. Indian cement prices have risen by 30% since April last year.
India’s inflation rate increased to 6.46% in the week ended 3 March from 6.10% in the previous week as prices of cement, fruit and other goods rose, the Ministry of Commerce & Industry said in a weekly report on 16 March.