High power costs to impede cement sector growth'

New Delhi: Higher power cost, Centre and State levies coupled with lack of quality coal will lead to contraction of growth of cement industry in 2006-07, according to a study undertaken by Assocham.

Cement remains the highest taxed essential infrastructure input in India. Levies and taxes, which account for 80 per cent of the ex-factory price is another major concern of the industry. For the Indian cement industry the excise duty alone works out to over 35 per cent on ex-factory cost, whereas the duty levied on luxury goods is only 24 per cent, the study points out.

Roadblocks


There is also a lot of concern in the industry regarding the pace at which infrastructure projects are materialising. The National Highway Authority of India had terminated eight contracts.

As the entire process of issuing fresh contracts takes quite a few months, it is unlikely that the NS-EW project will be completed in time, says the study. The study also outlines the delays in land acquisition and removal of structures, non-performance of contractors, and local law and order problems that have hindered the progress of these projects.

The study suggests that the Government continue to treat cement as a core sector, for only then can it prioritise the sector for coal blocks allocation. Moreover, the study adds, in the case of allocation of a coalfield, the Government should ensure that all the necessary formalities, including environmental clearance have been done so that the cement firms do not face any hurdles in their operations.