Despite a slowdown in demand for cement, the government has rejected industry’s plea to curb imports reiterating that there is still a scope for moderation of prices. Cement prices had gone up to Rs 280 per 50 kg bag on the back of demand-supply mismatch last year forcing the government to step in and levy dual excise duty based on retail price of the commodity.
“As of now, there does not seem to be enough ground for a re-imposition of import duties on cement,” said an official in the department of industrial policy and promotion who did not wish to be named. “We are monitoring the situation as always and there is still scope for further softening of price.”
On an average, cement prices across the country is at Rs 240 per 50kg. There are no duties levied on import of cement currently, while excise duty is Rs 350 per tonne for cement priced at Rs 190 per bag and 12 per cent ad valorem for the rest.
The government had encouraged cement imports from Pakistan in order to lower prices domestically. India imported 1,73,000 tonne of cement from Pakistan in the April-June quarter of this fiscal.
The industry, which has been investing heavily, believes the spectre of a glut and subsequent reduction in capacities in the offing.
“High interest rates have impacted user industries like real estate and housing and that has impacted demand for cement as well,” said HM Bangur, president, Cement Manufacturers Association. “Prices have fallen during the last quarter and fresh investments have been put on hold. If imports are not curbed, there will be a glut in 6-12 months’ time.”
According to the commerce ministry estimates, cement production needs to grow from 198 mt in 2008-09 to 268 mt in 2011-12.
The industry is in the process of adding 60-70 mt in the next two years with big-ticket investments coming from Anil Dhirubhai Ambani Group’s Reliance Cement, Burnpur Cement, Dalmia Cement and Jaiprakash Associates.
Meanwhile, M P Birla Group’s flagship company Birla Corporation on Wednesday announced its plan to set up a 3-million tonne cement plant in Madhya Pradesh at an investment of 1,200 crore. The new plant would augment the company’s total cement capacity to over 10 MT by 2011.
“We have decided to install a three million tonne cement plant in Madhya Pradesh for which we have already signed an MoU with the state government,” Birla Corp chairman R S Lodha said in Kolkata. “With commencement of this greenfield plant the cement capacity will cross 10 million tonne per annum,” he further said.