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| Cement industry seeks support in next Budget |
| Chandan Kishore Kant / Mumbai May 29, 2009, 00:40 IST |
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The domestic cement industry has once again sought abatement on cement from the government in the forthcoming budget to be presented by Finance Minister Pranab Mukherjee in July this year. The cement makers said, such a measure will push cement prices down around Rs 20 for a 50 kg bag.
Cement qualifies for abatement as the excise on it is levied on the basis of the maximum retail price. However, despite repeated pleas from the industry, the government had not paid heed to the industry’s demand.
Hari Mohan Bangur, president of the Cement Manufacturers’ Association, told Business Standard, “The industry had sought an abatement of at least 30-35 per cent from the government. Since, cement is a bulk commodity with a high distribution cost, abatement will help reduce the cement prices in the domestic market.”
Cement is one of the highest taxed commodities which is subject to levies both from the Centre and the states. Apart from excise duty, other taxes on the commodity comprises duties on power tariff, sales tax, royalty and cess on limestone, coal and gypsum.
ACC and Ambuja Cements too had said the benefits of abatement would be passed on to consumers. Amrit Lal Kapur, managing director of Ambuja Cements had told Business Standard earlier the company would pass on the benefits with immediate effect.
“Benefits from abatement will help kickstart the low-cost housing pojects as well. In a competitive scenario with several players in the market, passing of benefits by one company will result in a ripple effect and players will indeed pass it on to the consumers,” added Bangur.
The 218-million-tonne cement industry, the world’s second largest after China, has already got support from the National Council for Applied Economic Research. The council has recommended an abatement of 55 per cent for cement.
Industry analysts explained that on an average the benefit would be Rs 18-20 per bag, in case abatement is given. Presently, the average price of cement across the country is around Rs 240-245 a bag. This means, the prices could fall 7-8 per cent to around Rs 225-230 a bag.
Besides, the companies have asked for re-imposition of import duty on cement from Pakistan. Following continuous demand from the industry to re-impose a counter-vailing duty (CVD) to provide a level play field, government re-imposed the CVD. “Since the country no longer has a shortage of cement, the government should impose an import duty on cement,” said Vinod Juneja, managing director of Binani Cement.
The import duty on cement was at 12.5 per cent when abolished way back in April 2007.
The Department of Industrial Policy & Promotion, in its report, had said the import duty on cement was at a very low level of 12.5 per cent resulting in an eminent threat to the domestic industry. It had further added that it was necessary for the government to keep an eye out for support in terms of subsidies and non-tariff barriers being provided to cement companies by other countries.
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