Mumbai: India’s cement firms are seeking a cut on excise duty and a ban on imports in the upcoming Union budget in an effort to reduce prices and protect manufacturers who have set up new capacities, officials said.
Cement firms, to meet rising demand and an anticipated spurt in the government’s infrastructure spending, have increased capacity and prices, but now fear rising prices will dent demand for local products and encourage imports.
“The industry is seeking an abatement on cement from the government. Cement is a bulk commodity with a high distribution cost and abatement will help bring down prices in the domestic market,” H.M.Bangur, president of the Cement Manufacturer’s Association told the agency.
The association is demanding a 55% cut in excise duty on the commodity. Cement, apart from excise duty also attracts other taxes such as sales tax, royalty and cess on limestone, power tariff and cess on coal and gypsum.
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“This will help bring down prices by around Rs10-15 per 50 kg bag at 35% and 55% abatement respectively,” said an analyst with a Mumbai-based brokerage.
Bagged cement upto Rs190 per 50 kg bag currently has an excise of Rs230 per tonne whereas retail prices exceeding Rs190 attract a 8% duty on the sale price.
The association has also sought reimposition of duty on imports to prop up demand for locally made cement.
“There should be a Counter-Vailing duty (CVD) on imports as there is no longer a shortage of cement in the country. It will help create a level-playing field for domestic manufacturers,” said Vinod Juneja, managing director, Binani Cement.
Local cement attracts excise duty while imports are exempted from CVD, creating a disparity in the industry, the analyst said, adding that cheaper imports from Pakistan are hurting local firms.
“We can import if (local cement) prices go up,” HS Bharana, chairman of Delhi-based construction firm Era Infra Engineering had told the agency in April.
The industry also wants the export ban on cement to be lifted in order to increase the global competitiveness of Indian cement, officials said.
“Lifting of export ban is needed else the Indian cement industry will lose out the opportunity in the Middle East to other countries like Pakistan, Puneet Dalmia, managing director, Dalmia Cement (Bharat) Ltd said in a note.
Since January until last week, shares of ACC, India’s largest cement maker, rose 67% while shares of Binani Cement rose 60.4% higher compared with the 30-share BSE index’s growth.
In the same period Shree Cement surpassed the index’s performance to grow 157.5%.