Contrary to the govt’s intention, rates may rise by Rs3-5 per bag at the beginning of April.
The withdrawal of Duty Entitlement Passbook (DEPB) benefit for exporters, as part of the government’s efforts to rein in inflation, may not be enough to bring down cement prices.
In fact, if cement dealers and analysts are to be believed, prices might actually be hiked by Rs3-5 per bag from April.
The government last week withdrew DEPB incentives on a number of products, including cement. This means these companies will not able to claim drawback of import duties paid on any raw material used for manufacturing the items exported.
For cement companies, coal is the only imported material used, on which they enjoyed a 5% duty drawback. Given that cement export volumes are rather thin, the drawback amount isn’t difficult for the manufacturers to absorb. To top it all, domestic demand is quite strong, which means the companies need not reduce prices at all.
H M Bangur, president, Cement Manufacturing Association and managing director, Shree Cement, told DNA Money, "There would be no major impact of DEPB on cement industry. The demand for cement has increased almost 9-10% compared to last year."