Cement duty move not to affect prices

According to industry analysts, this will have a marginal effect because hardly 10 per cent of the cement sold in the country has the maximum retail price of Rs 250 a bag (50 kg).

H M Bangur, president, Cement Manufacturers' Association and managing director of Shree Cement, said: "Such a measure will have impact on certain regions of the country where the prices are on the higher side. This will include the north-east, Tamil Nadu, Kerala and Mumbai." There could be some "costs push" in these areas, said Bangur.

Till now, there were three excise slabs on cement. Cement at an MRP of less than Rs 190 a bag was attracting excise duty of Rs 350 a tonne and a bag that cost more than Rs 190 and up to Rs 250 attracted 12 per cent ad valorem. However, cement that cost more than Rs 250 was charged excise at Rs 600 a tonne flat.

An insider in the one of the largest domestic cement companies said: "Our prices (MRP) are below Rs 250 and the measure will not have much effect."

Industry sources say it is up to the companies to pass on the effect of the ad valorem hike to the customers or not. For instance, in Mumbai, if a bag of cement cost Rs 275, its ad valorem duty was Rs 30. Now it will be Rs 2.5-3 more.

Mumbai alone consumes 700,000 tonnes of cement in a month - the highest in the country.