The government is planning to act tough on cement companies attempting to form cartels to artificially increase the prices of the building material.
With an intention to prevent any such move, the government has asked cement companies to increase production of cement to prevent demand-supply mismatch contributing an increase in retail prices.
?The cement companies should know that the government is not helpless and it will intervene if there are any indications that the companies are resorting to cartelisation,? minister of state for industry Ashwani Kumar told reporters on the sidelines of the India Economic Summit here.
Pointing out that the Centre was monitoring the demand and supply situation in the market, Kumar said that the government had directed MMTC Ltd to import cement to ensure availability of the building material in the domestic market. The average price of cement has gone up to Rs 231 in October 2007 from Rs 158 per bag in December 2005.
Kumar said, while the cement companies are eligible to make their profits, it should not be by taking advantage of greater demand and lesser supply and by artificially pushing up prices.
?The cement prices are a little high but they are a functioning of the demand and supply. We are trying to ensure that there is no cartelisaton,? he said. Kumar had on November 20 said, ?The prices of cement have stabilised to a large extent showing an increase of only 2.67% between March and October 2007.?
To increase the domestic cement supply, the government had cut import duty on cement to zero, done away with countervailing duty and special additional custom duty, apart from permitting MMTC to import the building material.