Cement sector wants fixed duty to continue post-VAT

Our Corporate Bureau

Mumbai, Dec 10: The cement industry has asked for continuation of fixed rate of excise duty even after the introduction of VAT. The excise duty structure has also been beneficial for the Government, as revenues from excise have increased from 2.5-2.6 per cent to around 5.8 per cent levels. The industry has also asked for a relook at the customs duty for import, which had been withdrawn last year, according to Cement Manufacturers Association (CMA) secretary general AV Srinivasan.

Speaking to The Financial Express, Mr Srinivasan said, “Cement prices in Indonesia and other South-east Asian markets have collapsed. Prices which were at $55-60 per tonne have come down to around $20-22 per tonne. As a result, there is a possibility of dumping in the Indian markets.”

The industry has also asked for a reduction on limestone duty, which has added to the cost burden. Moreover, with inland freight rates at very high levels, CMA, in its pre-budget memorandum, also pleaded for reduction in railway freight.

“We demanded concession on railway inland freight by minimum 50 per cent, at least for overseas transhipment of consignment from factory to the nearest port,” Mr Srinivasan said.

Commenting on the performance of the industry during the current fiscal, Mr Srinivasan said that the industry had witnessed a growth of 5.8-5.9 per cent during the first eight months of the current fiscal. But the capacity growth has been higher, as a result of which there has been pressure on prices. This will affect the bottomlines of cement companies, he added.

Cement prices have seen a drop in the northern, central and eastern states while they have been fairly stable in the west and the south.

However, this has been offset by the growth patterns witnessed in the various regions. The northern and western regions have witnessed fair growth but the other regions have not witnessed a satisfactory growth.