Domestic cement companies including ACC, Ambuja Cements and Grasim are losing their market share in Punjab to cheaper cement imports from Pakistan.
The state has a monthly cement consumption of 560,000 tonnes and about 10 per cent of this demand is now being met through imports. Amritsar, Jalandhar and Ludhiana are the three markets that have been mainly affected.
Punjab has seen a spurt in the imports because of its proximity to Pakistan. Pakistan has been supplying cement to Punjab through the rail and road route via Wagah border.
These three companies together supply over 70 per cent of the state’s demand. The landed cost of Pakistani cement in Punjab is around Rs 200 per 50 kg bag while the average price of the domestic companies is Rs 235. The Rs 35 price gap is mainly due to the withdrawal of customs and countervailing duties on the cement imports by the government last year.
In January 2007, the government announced zero duty on cement imports. In April, it scrapped the 16 per cent countervailing duty to facilitate imports and augment availability. It also withdrew the 4 per cent special additional customs duty. Pakistan has exported over one million tonne of cement to India since September 2007. Leading real estate players like Emaar MGF is using some of the imported cement to partly offset the impact of high input costs.
“Imports are rising continuously. We are prepared to compete but we should be given a level playing field”, said A L Kapur, managing director, Ambuja Cements, which has a 25 per cent market share in the state.
Pakistan is able to supply cheaper cement mainly because it is coming duty-free while the price in India includes an excise duty of 12 per cent and a value added tax of 4 per cent.
“The government’s purpose was to cool prices and this has not happened. Whatever price correction has taken place in north India is mainly due to a dip in the demand owing to rains and new capacity additions. At the same time, the central exchequer is losing Rs 120 on every tonne of imported cement”, said an ACC spokesperson.
