Centre further relaxes ban on cement exports

The government yesterday relaxed the ban on export of cement in the backdrop of waning demand for this crucial construction input from the real estate sector. The ban was imposed on April 11 this year to curb the rapidly-rising inflation.

The cement industry says the move will have a marginal impact as the government had allowed export of cement from ports in Gujarat on May 27. The government had also allowed export of the construction material to land-locked Nepal, which depends on India for its supplies.

“Companies based in Gujarat account for 85 per cent of cement exports. The rest was mostly going to Nepal from plants in North India, especially in Uttar Pradesh. The latest move will have only a marginal impact. Maybe there could be some additional exports to countries like Bangladesh,” said AL Kapur, managing director, Ambuja Cement.

The relaxation comes at a time cement prices are declining because of lesser demand from the real estate/construction sector. The prices currently range between Rs 195 and Rs 250 per 50 kg bag, he said.

Cement exports were earlier banned in the backdrop of rapid increase in the inflation rate, which increased from 4.26 per cent in the week ended January 5 to 7.71 per cent in the week ended April 5, 2008. The ban was imposed to increase the availability of the construction material in the domestic market.

But now, with economic growth slowing, the demand has come down, leading to less capacity utilisation. Cement plants operated at 85 per cent of their capacity in the April to November 2008 as against 93 per cent in the same period last year.

In the period from April to the first week of December, prices in western, eastern and northern markets came down by Rs 10-12 per bag. In addition, cement companies decreased prices by Rs 5-9 per 50 kg bag after the central government announced a 4 per cent across-the-board cut in excise duty rates on December 7.

Cement exports in the April to November period stood at 1.79 million tonnes, down 29.5 per cent from 2.54 million tonnes in the same period last year. Total production in the April to November period increased by 6.63 per cent and stood at 115.38 million tonnes, as against 108.2 per cent in the same period last year.