GST impact: Industry body sees cement sector demand picking up in H2FY18

It adds logistics cost would come down by 30% under the new regime

Demand in the cement sector is likely to pick up from the second half of this financial year (FY) on account of benefits under goods and services tax (GST) and increased government spending on infrastructure, according to industry body Cement Manufacturers Association (CMA).

The industry will also benefit as the logistics cost would come down by 30 per cent because of elimination of blockage time at state check posts under the GST regime.

"The abolition of borders in the wake of the new tax regime has reduced the blockage time at check posts and thereby expediting the movement of the goods and the reducing turnaround time of the trucks," CMA President Shailendra Chouksey told PTI.

The overall cost involved in the logistics is also expected to come down by at least 30 per cent in the next few weeks, he added.

According to Chouksey, the cement sector will get a boost as the government is now spending heavily on the infrastructure.

"The government has taken infrastructure projects which are cement incentive, be it highway or affordable housing, and all have potential to raise consumption, and GST will help in [the] availability of the required funds," said Chouksey, who is a whole-time director of JK Lakshmi Cement.

The cement sector, which had witnessed a de-growth last fiscal, is expected to revive from the second half of this FY.

"Next fiscal, we would definitely have a better year and there will also be [an] improvement in the second half of the ongoing fiscal," he added.

Under the GST, there has been a price reduction of around 5 per cent on the bagged cement sold in the open market.

The tax incidence on the loose cement, sold to the institutional clients has gone up by around 4 per cent, according to Chouksey.

"Both categories have come under 28 per cent tax slab under GST," he said, adding that there has been an added advantage of input tax credit.

"From the input side, we were getting credits earlier also but now under GST coal is charged at [a] lower rate now," he added.