Cement makers want Budget to bring anomaly to end

Ask govt to scrap import duty on coal, pet coke, gypsum on which industry is heavily dependent due to shortage of indigenous coal

Cement makers today requested the government to bring to an end the existing anomaly, where duty on import of inputs is higher than on finished product, in the forthcoming Budget.

"The government should scrap import duty on coal, pet coke, gypsum and other fuels. The cement industry is heavily dependent on imported coal and pet coke due to short supply of indigenous coal," JK Lakshmi Cement Managing Director Vinita Singhania said.

Pet-coke and gypsum now attracts 2.5% import duty and coal attracts 5% duty, while there is no duty on cement import. "This leads to an anomaly in which import duty on inputs is higher than the finished product," she added.

Raw materials constitute a large part of the total cement manufacturing cost. A good part of their bottomline got eroded in the third quarter of the current fiscal with the surge in the raw material costs.

The Budget session of Parliament is slated to start on March 12.

Meanwhile, excise duty on cement is also higher than other core and infrastructure industries. A major cement firm said the rate should be brought down to around 5% from 10%.

"Cement is one of the core infrastructure industries and has limited manufacturing capacity in view of the expected GDP growth and projected demand for cement over the medium to long term.

"To encourage the industry and bring it at par with other core and infrastructure industries, excise duty rate should be rationalised from 10% to around 5%," the company said.

India's cement sector is now besieged with an oversupply situation which is mainly responsible for squeezed margins of the cement makers.

In a report, rating agency Fitch recently said that the demand-supply imbalance would reach to its peak in FY13 to 125.8 million tonne per annum with capacity going up to 392.8 million tonne.