Cement industry expects no relief from Budget

The domestic cement industry, which was hit hard by many unfavourable government policies last year, is not hopeful of any positive news from this year's Union budget.

Industry sources said that expecting cuts in excise duties and levies seemed "unlikely" at a time when cement prices remained firm.

Chief financial officer of one of the leading cement companies, who did not wish to be named, said, "Despite the government's restrictive measures last year, cement rates failed to come down. Therefore, it is hard to expect of any positive news from the budget."

In its pre-budget memorandum, the cement manufacturers' association (CMA) has asked for reduction in central levies and excise duty on cement.

Besides, the industry has requested the government to reduce the value-added tax (VAT) on cement and clinker from the current 12.5 per cent to 4 per cent and demanded re-imposition of countervailing duty (CVD) on imports.

H M Bangur, president, CMA, said, "We have put our suggestions and it is up to the government to take a decision on it."

The industry body argued that if VAT was reduced, prices would come down by around Rs 20 a bag (of 50 kg). At present, the average rate of cement across the country is in the range of Rs 230-240 a bag.

According to analysts tracking cement sector, possibility of any cuts in the existing tax structure is very thin. On the CVD front, they said, unless supply outpaces demand, such a step seemed far fetched.

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WISH LIST

Cement industry wants:

Central levies and excise duty, which constitutes over 60% of the ex-factory price of cement, be reduced

VAT on cement and clinker be reduced to 4% from existing 12.5%

Customs duty on coal and pet coke be abolished

CVD be re-imposed to the extent of excise duty on cement imports

Supply of fly ash to cement firms at no cost

Govt policies that affected the industry in 2007

January, '07: Abolishes customs duty of 12.5 % on imported cement

February, '07: Imposes dual excise duty of Rs 350 a tonne on cement at or below Rs 190 a bag and Rs 600 a tonne for over Rs 190 a bag

April, '07 : Withdraws countervailing duty (CVD) of 16% on imports, withdraws special additional customs duty of 4%