Cement import duties waived

In the latest attempt to contain inflation, the government today made cement imports duty-free.

It also indicated its willingness to remove the dual excise duty structure on cement that was announced in the recent Budget.

The government has abolished, with immediate effect, the countervailing duty of 16 per cent and additional customs duty of 4 per cent on Portland cement, widely used in construction. This follows full customs duty exemption on Portland cement in January.

Meanwhile, Hema Ambika Priya, spokesperson for the Central Board of Excise and Customs said the government has an open mind on rolling back the dual excise duty structure.

In turn, domestic cement companies have been asked to come up with proposals to reduce prices.

Cement prices have risen from an average of Rs 165 (per 50 kg bag) in January 2006 to Rs 209 in February this year and subsequently to Rs 220. Since the Budget, differences have arisen between North Block and domestic manufacturers.

The domestic industry is not happy with the latest move. "The industry did not anticipate such a move. We are yet to understand the implications of this announcement," said H M Bangur, vice-president of the Cement Manufacturers' Association and chairman and managing director of Shree Cements.

Other sources pointed out that even the domestic industry could have reduced prices if they were given such (duty) concessions.

Finance Minister P Chidambaram accused the industry of hoarding, while manufacturers maintain that the high prices are a consequence of a demand-supply mismatch.

Finance Minister P Chidambaram, in his Budget speech on 28 February, had announced a reduction in the excise on cement, from Rs 400 per tonne to Rs 350 per tonne for those selling at Rs 190 per bag or below and a duty of Rs 600 per tonne for those selling above Rs 190 per bag.

The cement producers raised prices by Rs 10-12 per bag the very next day to pass on the excise hike to consumers.

In a series of meetings with the government, the industry had said it would not raise prices for a year but refused to roll back the post-Budget hike, arguing that such a move would be subject to the government scrapping the dual duty structure.