Budget 2012-2013: Cement makers demand

Ms. Vinita Singhania, MD

Indian cement makers have requested the central government to bring to an end the existing anomaly, where duty on import of inputs is higher than on finished product, in the forthcoming Budget,  2012-2013.

Ms. Vinita Singhania, MD, JK Lakshmi Cement said, "The central government should scrap import duty on coal, pet coke, gypsum & other fuels. The cement industry is heavily dependent on imported coal and pet coke due to short supply of indigenous coal"

Pet-coke & gypsum now attracts 2.5% import duty & coal attracts 5% duty, while there is no duty on cement import.

Raw materials constitute a large part of the total cement manufacturing cost. A good part of their bottomline got eroded in the 3rd quarter of the current fiscal with the surge in the raw material costs.

Meanwhile, excise duty on cement is also higher than other core and infrastructure industries. A major cement firm said the rate should be brought down to about  5% from 10%.

JK Lakshmi Cement said in a statement, ''Cement is one of the core infrastructure industries and has limited manufacturing capacity in view of the expected GDP (Gross Domestic Production) growth and projected demand for cement over the medium to long term. To encourage the industry and bring it at par with other core and infrastructure industries, excise duty rate should be rationalised from 10% to about 5%"

India's cement sector is now besieged with an oversupply situation which is mainly responsible for squeezed margins of the cement makers.

In a report, rating agency FITCH said, "The demand - supply imbalance would reach to its peak in 2012- 13 to 12.58 crore tonne per annum with capacity going up to 39.28 crore tonne.

The Budget session of Parliament is slated to start on March 12.

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