Government waives import duty on cement to check price rise

03 Apr 2007

Mumbai: The government has waived import duty on cement in a bid to curb spiralling prices. The government waived the 4 per cent additional customs duty and the 16 per cent countervailing duty on cement.

"With a view to increase availability of cement and moderate prices, the government has exempted imports of portland cements (other than white cements) from countervailing duty (in lieu of excise duty) and the special additional duty of customs of 4 per cent vide notification no.53/2007-Customs dated 3.4.2007 with immediate effect," the finance ministry said in a statement.

The government said it expects cement manufacturers, in the larger interests of consumers and for checking inflation, will take appropriate measures for moderating cement prices, the statement added.

Cement prices have been rising in the course of last one year. The average price of cement has risen from Rs165 per 50 Kg. bag in January 2006 to Rs209 per 50 Kg. bag in February 2007 and to Rs220 per 50 Kg. Bag in March 2007 , the government said.

The government, with a view to keep prices of cement in check, had fully exempted basic customs duty on portland cements in January 2007. However, cement prices continue to be high.

The government has requested the cement industry to moderate prices in the interest of the consumer. However, the industry is of the view that the prevailing high prices are a consequence of a demand-supply mismatch. It is expected that the present move will improve supply situation in the country.

The government had already invited cement manufacturers to come forward with proposals to moderate the price of cement.

Commerce minister Kamal Nath had indicated earlier that the government might take steps to encourage cement imports to contain spiraling prices of the construction material.

Due to prevailing high prices in the international market, cement imports have failed to cool domestic prices despite the abolition of import duty in portland cement. "We need a 100 million tonne capacity in the cement industry," Nath said, adding the government wanted to see a health industry so that supply demand gap does not remain.

Nath, however, said there was no discord between cement industry and the government. He said the cement industry has pledged not to increase prices for the next twelve months even if input costs increase. "For the next twelve months they would not be raising prices and that is the most important thing," he said.

Nath disagreed that due to exports there was shortage of cement and argued that exports are minimal and limited to neighbouring nations like Nepal and Bangladesh.