Seeking status quo on excise, more protection from imports

S. Vaidya Nathan

THE cement industry has as usual placed its set of demands for the Budget.

These centre around the following aspects:

*A continuation of the specific rate of excise duty on cement (Rs 350 per tonne).

*The industry prefers the value added tax subject to the caveat that it is adopted through the specific rates of duty and not on ad valorem duties.

*A reduction in the import tariff on non-coking coal as this is the basic fuel for the industry. This accounted for 25-30 per cent of the manufacturing cost.

*An increase in the quantum of fuel oil that is allowed to be imported free of duty.

*Changing the recent hike in royalty on limestone from Rs 32 to Rs 40 per tonne and a correction of the anomalies between limestone and other mineral based industries.

*Facilitative support for clinker and cement exports by increase in the level of duty free import of coal from 20 per cent to 100 per cent.

*Full compensation for levies at the State-level which amounts to Rs 135 per tonne comprising a variety of levies and taxes on key inputs.

*Develop infrastructure for handling bulk cement exports through modification of norms to enable setting up of bulk cement terminals.

*Companies that make large investments in infrastructure should be allowed to take full rebate under the Income-Tax Act.

*A 10 per cent increase in the import duties on cement from 38.5 per cent plus countervailing duty (CVD) and Special Additional Duty (SAD) to 50 per cent plus CVD and SAD.

These are not very different from the broad thrust of what the industry has been seeking. The accent on infrastructure is significant as only good growth here can lift growth rates in demand to a higher level than the 8 per cent trend that has been evident so far. In the context of the recent trends, the demand to hike the import tariffs shows an industry that is seeking more protection should import become a major alternative.