Budget Impact on Cement Industry              

Budget Impact on Cement Industry               (updated - 08 July 2009)
Besides some boost for rural development and empowerment, the budget 2009-2010 was virtually silent for the cement industry.

The differential excise duty structure for the cement industry was kept unchanged. Besides, there was no change in the import duty of basic inputs like coal, PET coke, gypsum, etc.

The cement industry is one of the most heavily taxed sectors with a complex 3-tier excise structure. Apart from excise duty, other taxes on the commodity comprise duties on power tariff, sales tax, royalty and cess on limestone, coal and gypsum.

Lower excise duty and abatement on it would enable the industry to pass on the benefit to the final consumer.

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The industry had requested rationalisation of the excise duty, besides abatement of 35-55% on the MRP of the cement bags. In order to establish a level playing field for the domestic cement manufacturers with the importers the industry body had requested to re-impose import duty and CVD on imported cement.

Exemption in import duty on Pet coke and coal and reduction of VAT in line with similar important construction material like steel was desired by the industry.

Although the current demand is strong, going ahead there is a likelihood of margins of the cement industry being squeezed due to pricing pressure. High excise duty and customs duty on raw materials imported will render the sector uncompetitive.

Also, the budget has introduced service tax on transportation of goods by rail, which will negatively affect the transportation cost for the cement industry.