Cement firms assure price cuts on excise abatement

The domestic cement industry has assured that if the government allows an excise duty cut on the commodity, it will benefit the consumers.

Amid rising pressure from the government on the cement companies to cut down prices, industry analysts said an abatement would result in a cut of 7-8 per cent in the prevailing cement rates.

H M Bangur, president of Cement Manufacturers' Association, and managing director of Shree Cement, said: "The entire industry will pass on the total benefits to the consumers if the government gives the abatement on excise duties on cement. There is no question of keeping that money in our pocket."

Presently, average excise on cement is around Rs 550 a tonne. That means on a 50-kg bag of cement, the excise is a little less than Rs 30. After abatement, the overall excise will amount to less than Rs 300 a tonne. "On an average the price reduction will be around Rs 18-20 a bag," said Bangur.

Domestic cement giants ACC and Ambuja too have said that the benefits of abatement would be passed on to the consumers. "We will pass the benefits with an immediate effect once we get the abatement on excise duties," said AL Kapur, managing director, Ambuja Cements.

Cement qualifies for abatement as the excise on it is levied on the basis of maximum retail price (MRP). However, the government has singled out the commodity and gives no abatement on it.

Meanwhile, the industry has received support from the report of the National Council for Applied Economic Research (NCAER) which has recommended an abatement of 55 per cent for cement.

On the basis of dispatches in the FY08, analysts say the sector pays more than Rs 9,000 crore as excise annually to the government's exchequer.

Cement is one of the highest taxed commodities in the country subjected to levies both from the Cenre and states. Apart from excise duty, other taxes on the commodity comprise duties on power tariff, sales tax, royalty and cess on limestone, coal and gypsum.

The domestic industry, whose current installed capacity is 189 million tonnes (mt), sold 167.67 mt in FY08, compared with 155.26 mt in the previous year.

Cement industry ready to immediately pass on the benefits

Industry pays over Rs 9,000 crore as excise

Cuts will be around Rs 18-20 for a bag of 50 kg

NCAER recommends 55% abatement on cement excise

Abatement will amount to Rs 330 reduction on a tonne of cement

Cement qualifies for abatement as excise is on its MRP