Finance Minister Nirmala Sitharaman on Tuesday indicated that the government would look into a reduction in the 28% Goods and Service Tax (GST) rate for cement. She also noted that the country has been able to get fuel at relatively lower prices in the current global turmoil due to a strong leadership. She sought out-of-box ideas from India Inc that could act as catalyst to boost investment.
At a post Budget meeting with CII leaders, the minister said the issue of a possible reduction in the GST rate on cement will be examined and if required will be considered for reference to the GST fitment committee. She was responding to a suggestion of reducing the GST on cement from the current 28%, which would help bring down the cost of construction both for public works and private construction activities like housing. The Budget FY24 has given priority to capex by the government with special focus on infrastructure sectors like railways and highways.
In non-bulk cases, cement is used by individuals for purposes like constructing their own house but they are usually not able to take input tax credit on it.
According to IIFL Securities, all-India average cement price was flat month on month in January 2023. Regionally, marginal increase was seen in Central (+1.6%) and West (+1.1%) markets, while prices in South and East markets declined by 1.5% each — followed by about 1% fall in North, it said.
On a question on whether the Budget has buffers against against external shocks, the finance minister said, “Buffer or no buffer, we will have to face the situation as it arises.” She further noted that the government did this even in the case of fertiliser prices in 2021. “We didn’t let the farmers down, we imported as much and more. We also didn’t shift the burden of higher prices on the farmer,” she stressed, noting that an additional provision had been made for it initially.
The minister also urged industry to come up with new out of the box ideas on investments and technology and identify catalysts beyond production linked incentives (PLI) for growth of sunrise sectors. She also stressed that industry must work on out of the box ideas and work with start-ups on newer technology.
She also said the strong leadership and government has helped the country during the current period of global turmoil and churn by ensuring that fuel prices remain low and exports don’t get disrupted.
“…national interest was put up at top of the agenda, otherwise you wouldn’t have had fuel. Energy costs were going up, we couldn’t have bought in… the recent discussion on capping the price. But because of the strong leadership and direction and the way PM has engaged with leaders globally, we are now able to get fuel continuously, far cheaper than anywhere else. And hasn’t that helped us? Similarly, on many other issues, getting fertiliser, making sure our exports go without disruption… Globally being able to take a call, take a position, stand by it are all in the interest of our country,” Sitharaman said later in her address.
The minister also noted that post-Covid the industry has started looking at opportunities beyond their own sectors and is now factoring in Sustainable Development Goals and green technology as part of their expansion plans. “Your investment plans are a lot more calibrated and are not just for expansion’s sake but you are looking at technologies that will make you consistent with SDG goals. Your expansion can not be only monetary or demand consideration,” she said, noting that these decisions will take more time to fructify. While the government has reduced the corporate tax rate, companies will consider these issues of technology and energy and will take time to finalise their expansion plan.