India: cement industry to get a big boost

India: cement industry to get a big boost
Published: 20 November 2009

India’s state government on Wednesday cleared the long-awaited concession policy for use of limestone by cement units. The move is likely to facilitate setting up of a number of cement plants. The magnitude of investment may be up to around INR64,400 crore (US$13.8bn) in the state.

During Vibrant Gujarat Global Investor Summit (VGGIS)-2009, the state government had signed 34 MoUs with private companies to set up cement units at an outlay of INR42700 crore. In two earlier VGGIS in 2007 and 2005 too, a number of MoUs had been signed to set up cement units with an investment of INR21700 crore.

The limestone concession policy was under preparation for almost a year, due to which around 40 proposed cement plants were awaiting clearance.

Saurabh Patel, minister of state for industry, announced the policy.

"The MoUs signed during VGGIS in 2007 and 2009 envisaged setting up of cement units with a capacity of 110 million tonnes per annum. Therefore, the new limestone policy will give a great boost to cement industry in the state, and will also help the state in many ways,’’ the minister said. He further said, "The new guidelines for land allotment for limestone mining will be applicable to those who have been issued letters of intent (LOI), but with whom no lease agreement has been executed. Even those units who have been granted lease or with whom lease deeds have been executed will be entitled to get benefits under the new policy for their expansion plans. But they will have to establish units with a capacity of 2Mta within five years of getting LOI. The companies will be given limestone licence for 30 years."

"Moreover, the companies will be liable to give bank guarantee of INR40 lakh for every million tonne capacity planned. If a company fails to execute the project in the given time, the guarantee company will be subject to forfeiture," the minister said.

"The most important provision in this new guideline is that we have made it compulsory for every cement plant to give three per cent of their production to the state government for its public works projects, after three years of project commencement," Patel added.