Cement, steel firms seek to tap Middle East potential

Indian cement and steel companies plan to set up units in the Gulf to tap the potential of the over 10 free trade zones in the region. There is an increasing demands for cement and steel in the Middle East due to the infrastructure and development work being undertaken.

"Indian steel majors plan to set up units in the Gulf because of the increased demand there. Money is also available at much cheaper rates there as compared to India," Moosa Raza, president, Indian Steel Alliance (ISA), an association of major Indian steel producers, said.

"Our focus is to tap cement and steel companies to the UAE because of the major infrastructure and development works being undertaken there. Recently, a Kerala-based steel company, P Ahmed, set up units in the Haamriyah Free Zone (HFZ) at Sharjah. HFZ officials are also in talks with Tata Steel and a PSU steel major for setting up units there," said Leela Karunaratne, senior sales officer, Haamriyah Free Zone Authority.

According to cement industry sources, Gujarat Ambuja and Sanghi Cements plan to set up units in the Gulf as raw materials are cheap there.

"India accounts for over 40 per cent of the cement exports to Gulf countries because of the increasing infrastructure and development work. Cement majors are attracted to set shop in the region because of good local demand, low energy cost and availability of cheap raw materials," said Sanghi Industries' senior president Hemant Pandey.

"Sanghi Industries has the world's largest cement plant with an installed capacity of over four million tonne. We have been forced to stop taking export orders till 2006 because of optimum capacity utilisation at our plant. We plan to double capacity to over eight million tonne by investing over Rs 700 crore to meet increasing export demands," he added.

The reconstruction of Iraq is a key reason for the spurt in demand for steel and cement in the Gulf. Due to India's close proximity to the countries in the region, most of the steel and cement imports into the Gulf region are from India. Now, Indian companies are concentrating on setting up units in the region, rather then focusing on exports.

The investment incentives provided by the free zone in the Middle East include 100 per cent foreign company ownership, 100 per cent import and export tax exemption, 100 per cent exemption from all commercial levies, 100 per cent repatriation of capital and profits, easy availability of lease.

No corporate taxes and no personal income taxes are applicable for the units set up in the free zones.