Move to scrap cement import duty may not impact retail price

Mumbai: The Government move to scrap import duty on cement may not have any impact on the retail prices of domestic cement, said industry sources.

Little impact

'Allowing duty free cement will not have any impact on retail prices. The high logistics cost makes it unviable for users to import cement. Bulk users may consider importing cement from Thailand and Indonesia, but again the cost might not be competitive,' said Mr Manish Balwani, Research Analyst with Emkay Private Client Group.

'We do not see any immediate effect on cement prices,' said a senior official with Grasim Industries. There could be a marginal price advantage of Rs 5-10 per bag in the coastal areas but in the landlocked Indian states, freight costs will drive up the price of imported cement to domestic levels, he said.

Facilities


India also does not have adequate facilities to import large quantities of cement. In addition, India is not considered a very attractive market for cement exporters, he added.

The scrapping of import duty on cement creates more of a psychological impact, as a warning to show that measures are being taken to arrest inflation, said a senior official with another cement company. Between April-December 2006, India exported 4.58 million tonnes of cement while in 2005-06 it was 6 million tonnes. Cement prices in India are on the rise and leading cement companies have been investing heavily in capacity additions to meet demand.

ACC and Gujarat Ambuja Cement are together investing over Rs 3,000 crore in setting up greenfield plants and ramping up capacities. AV Birla group companies Grasim Industries and Ultra Tech Cement will be investing close to Rs 3,900 crore in capacity additions.