Excise duty spells double trouble

BUDGET & COMMODITIES

Cement has a weightage of 1.73 per cent in the wholesale price index (WPI) and has been witnessing inflation levels of about 10-15 per cent in recent times. The prices of cement in the domestic market have moved up by 30-40 per cent over the past one year to Rs 210 (50 kg bag).  The Impact

The industry may increase prices to offset the loss on account of higher duties. The education cess hike to 3 per cent will increase the burden further. So far, cement producers were paying a cess of Rs 8 per tonne (2 per cent on an excise duty of Rs 400). Now, the companies that manage to sell cement at or below Rs 190 per 50 kg will have to pay a higher cess of Rs 10.50 per tonne while those who sell at prices above this will shell out Rs 18 per tonne as education cess.

 While the industry is yet to understand the implication of these measures, the stock market reacted immediately. Share prices of the cement companies fell by an average 6 per cent on the Bombay Stock Exchange.