India: cut in excise duty

India: cut in excise duty
Published: 25 February 2009

In a move to boost up the demand in domestic market, the government has announced 2% excise duty cut on bulk cement.

Post announcement, excise duty will be levied at 8% or Rs230/tonne; whichever is higher. Post excise duty cut, the prices of bulk cement are expected to come down by Rs3/tonne, provided companies pass on the benefit to consumers.

However, bulk cement contributes just 8-10% of total cement off-take and thus expected to have marginal impact on overall cement demand. Extension of 4% cut in cement beyond March 2009 would help support the demand marginally.

The government has also announced 2% cut in general excise duty from 10% to 8%, which will be applicable on steel products.

Previously, in December 2008, the government had announced across the board reduction in excise duty on cement and steel by 4%. Post excise duty cut, prices of steel products are expected to come down by Rs500/t.