This is the first time that the cement industry has agreed to a price cut following the government efforts since February last year. This is applicable to the cement price prevailing as on April 1 since there has been a marginal softening of prices in select states since April 1.
"To address the inflation concerns, the cement industry has agreed to a price cut. However, the cut will not be applicable in states like Tamil Nadu and Andhra Pradesh where companies are already supplying cement at concessional rates," Union Commerce Minister Kamal Nath told reporters after a meeting with representatives of leading producers like Ambuja Cements, Jaiprakash Associates and Shree Cement.
Cement has a weight of 1.73 per cent in the country's wholesale price index-based inflation. Inflation for the week ended April 26 rose to a 42-month high of 7.61 per cent.
"Most states are expected to benefit from the decision. We will retain prices for the next three months after the cut. The government has also promised to look into the issue of coal linkages to the industry," said H M Bangur, president, Cement Manufacturers Association, and managing director of Shree Cement.
Cement prices, though largely stable over the last one year, had risen by 30-40 per cent in 2006-07 owing to a demand-supply mismatch. In 2007-08, the cement industry added a capacity of 10 million tonnes (mt), taking the total capacity to 175.6 mt.
Over the last one-and-a-half years, the government has taken a host of measures to check cement prices and control inflation, the latest being an export ban and a 12 per cent ad-valorem duty on the commodity selling above Rs 250 per 50-kg bag.
Last year, the government had allowed cement import on zero duty, leading to cheaper import in small quantities from Pakistan.
