Customs duty cut on cement to help end monopoly: Experts
By Rajat Guha & Mayur Shekhar Jhaz, TNN |
NEW DELHI: The government���s decision to abolish customs duty on portland cement from existing 12.5% has been welcomed by both real estate developers and cement industry. Portland cement accounts for only 32% of production in India.
Industry experts are of the view that in the long run, the move will help combat monopoly of a handful of large cement manufacturers in India. However, they say the exact benefit or impact can not be quantified as volume of portland cement imported for the construction sector is quite small.
���Worldwide, cement as a business is of a very localised nature,��� an official in the cement manufacturer���s association (CMA) pointed out. CMA president Manoj Gaur was not available for comment.
For real estate developers and construction companies, the move might bring in a great amount of respite in the long run, but some believe it would not make the cut. Housing and real estate construction account for over 60% of cement demand in India.
Era Constructions chairman H S Bharana said, ���There is an increasing concern for quality developments. It is a good policy move and this will incentivise an increased import of portland cement.���
���Normally in construction projects, we use blended cement and the customs duty on this has not been changed,��� Zoom Developers��� real estate head Ramneek Bawa said.
According to analysts, in next two-three years, the industry is expected to add 70-80 million tonnes of cement capacity. This is almost half the current installed capacity. Regional players have been the most aggressive in capacity expansion. Cement being a bulky commodity with freight costs accounting for a large portion of cost, prices in the interior regions are unlikely to be affected.
Industry experts are of the view that in the long run, the move will help combat monopoly of a handful of large cement manufacturers in India. However, they say the exact benefit or impact can not be quantified as volume of portland cement imported for the construction sector is quite small.
���Worldwide, cement as a business is of a very localised nature,��� an official in the cement manufacturer���s association (CMA) pointed out. CMA president Manoj Gaur was not available for comment.
For real estate developers and construction companies, the move might bring in a great amount of respite in the long run, but some believe it would not make the cut. Housing and real estate construction account for over 60% of cement demand in India.
Era Constructions chairman H S Bharana said, ���There is an increasing concern for quality developments. It is a good policy move and this will incentivise an increased import of portland cement.���
���Normally in construction projects, we use blended cement and the customs duty on this has not been changed,��� Zoom Developers��� real estate head Ramneek Bawa said.
According to analysts, in next two-three years, the industry is expected to add 70-80 million tonnes of cement capacity. This is almost half the current installed capacity. Regional players have been the most aggressive in capacity expansion. Cement being a bulky commodity with freight costs accounting for a large portion of cost, prices in the interior regions are unlikely to be affected.
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