As the Indian government has brought back the countervailing duty (CVD) on cement the domestic cement industry has supported the move with HM Bangur, president of the Cement Manufacturers’ Association and managing director, Shree Cements told the Economic Times: “We welcome the move as cement industry’s long pending demand has been met.”
Since last April, margins of Indian cement companies have been hit. This was when imported cement began coming in the country at a lower price. Now imported cement would attract CVD/SAD. "This will reduce the attractiveness of imported cement, said an analyst with a domestic brokerage firm. The CVD today is Rs 408 per tonne while Special Additional Duty (SAD) is at 4%.
As the landed cost for imported cement increases, the low cost inferior cement from Pakistan will no longer be cheaper, Mr Bangur added. The landed cost of imported cement from Pakistan works out to around Rs145 per bag.
In Pakistan, there is already about 7-8 million tonnes per annum (mtpa) of oversupply. Some of this is imported into India from companies like Lucky Cement and DG Khan Cement. A few months ago, the Indian government had in fact welcomed subsidised imports and in a further bid to increase domestic supply exports were banned. These measures then led to a reduction in prices by as much as Rs10 a bag in the northern and eastern region due to demand slowdown and imports from Pakistan.
Meanwhile, India’s Aditya Birla Group said on New year’s Day that its cement dispatches in December rose 13.4 per cent from a year ago to 2.98Mt. Production for the month rose 14.9 percent to 2.93Mt The group’s cement business includes flagship Grasim Industries and UltraTech Cement with a combined production capacity of 35Mta.