MUMBAI (Reuters) - India's cement firms are seeking a cut on excise duty and a ban on imports in the upcoming federal budget in an effort to reduce prices and protect manufacturers who have set up new capacities, officials said.
Cement firms, to meet rising demand and an anticipated spurt in the government's infrastructure spending, have increased capacity and prices, but now fear rising prices will dent demand for local products and encourage imports.
"The industry is seeking an abatement on cement from the government. Cement is a bulk commodity with a high distribution cost and abatement will help bring down prices in the domestic market," H.M.Bangur, president of the Cement Manufacturer's Association told Reuters.
The association is demanding a 55 percent cut in excise duty on the commodity. Cement, apart from excise duty also attracts other taxes such as sales tax, royalty and cess on limestone, power tariff and cess on coal and gypsum.
"This will help bring down prices by around 10-15 rupees per 50 kg bag at 35 percent and 55 percent abatement respectively," said an analyst with a Mumbai-based brokerage.
Bagged cement upto 190 rupees per 50 kg bag currently has an excise of 230 rupees per tonne whereas retail prices exceeding 190 rupees attract a 8 percent duty on the sale price.
The association has also sought reimposition of duty on imports to prop up demand for locally made cement.
"There should be a Counter-Vailing duty (CVD) on imports as there is no longer a shortage of cement in the country. It will help create a level-playing field for domestic manufacturers," said Vinod Juneja, managing director, Binani Cement.
Local cement attracts excise duty while imports are exempted from CVD, creating a disparity in the industry, the analyst said, adding that cheaper imports from Pakistan are hurting local firms.
Source : REUTERS