The Hindu Business Line : Cement producers not worried about imports

Reacting to the move to do away with the countervailing duty and the additional import duty on cement imports, manufacturers said it represents a concession of over Rs 600 a tonne to importers. The manufacturers were not worried about imports or the impact on domestic prices, as Indian cement prices were competitive, they said.

Mr N. Srinivasan, Vice-Chairman and Managing Director, India Cements Ltd, said cement price was decided by the demand-supply situation. Cement prices here were competitive despite the Centre's decision to do away with the countervailing duty.

Mr Srinivasan, who is a former president of the Cement Manufacturers' Association, said the Centre's latest move gives the overseas manufacturer an advantage of Rs 600 a tonne over local producers who pay excise duty. This concession was in addition to the earlier decision of doing away with the import duty on cement.

Despite the concessions imports were not happening because domestic prices were competitive. This proves that the cement prices were not high, he said.

`Pressure tactic'

The industry is hurt that the Government was putting "extreme pressure" on it, especially in a free market condition, he said.

Cement prices had undergone a correction last year. The increase had been less than inflation and lower than that of other building materials. For years the industry had been building up capacities ahead of demand and only last year the equation had changed leading to the correction. In the next 3-4 years, an additional 100 million tonnes of capacity is being added, he said.

The manufacturers had explained to the Government that for years the cement prices had been low and had also agreed that they would not increase prices. But now the Government had `unilaterally broken the accord.' The industry was also facing a hike in rail freight because of the busy season, he said.

Other manufacturers pointed out that the Government's concession on import duty and countervailing duty to importers amounted to about Rs 35 a bag. However, even after the import duty had been lifted there had been no imports.

Freight costs and port infrastructure were all factors in deciding imports of this high volume, low value commodity. The manufacturers were keeping a close watch on the import situation, they said.