Budget provides mixed bag for cement sector, say ind players

Statting that the Budget is a mixed bag for the cement sector, industry players today expressed the hope for revival in demand on government's focus on infrastructure but said they were saddened by no tinkering in tax rates.
"Cement sector can certainly look forward to revival of growth in its consumption which has been languishing for the last 3-4 years at very low levels," said Shailendra Chouksey, Vice President, Cement Manufacturers' Association (CMA).
Demand for cement remained subdued with poor offtake from the construction sector that has been languishing as a result of below-par economic growth of the country.
Indian cement industry, which is second to only to China, has over 340 million tonnes of capacity but the capacity utilisation of the major makers of the building material has been far from encouraging.

This led to a sustained squeezed margin for cement makers which were looking for some tax relief from the government. It also made a representation to the government urging rationalisation, Chouksey, who is also JK Lakshmi Cement's Wholetime Director, said.
The government has chosen to focus on the housing and infrastructure sectors as a means to kick-start economy.

"Cement sector was looking for some rationalisation of high incidence of taxes which it had represented as current tax structure works out to almost 50 per cent of ex-factory value of cement.
"It appears, however, compulsions of inadequate revenue in Finance Ministry's hand has not made it possible to merit the consideration," he said.

Cement industry was also expecting it to be considered under the category of "Declared Goods" under section 14 of the Central Sales Tax Act to enjoy the tax benefits that other core sector goods like coal and steel are currently availing.
Basic customs duty is not applicable on import of cement. However, customs duty is applicable on raw material needed for manufacturing cement such as limestone and gypsum.