Indian cement manufacturers are unlikely to respond to a government request that industry cut prices to cool inflation, a government official said Monday.
"We have requested (cement companies) rein in prices, but they have expressed their inability due to the difference in excise levy," said the senior industry ministry official.
In the annual budget last week, the government raised the excise tariff on cement to 600 Indian rupees ($13.55) a ton from INR408/ton for a 50 kilogram bag sold at more than INR190. The tariff was cut to INR350 for cement sold at less than INR190 for a 50kg bag.
As a result, several cement manufacturers raised prices by INR12 a bag, citing cost pressures.
Cement company executives met senior industry ministry officials earlier Monday to express their displeasure over the introduction of the dual pricing mechanism for cement.
Finance Minister P Chidambaram said earlier Monday that the price of cement was "unreasonably high" and the industry should cooperate with the government in controlling inflation by holding prices.
According to latest government data, the inflation rate eased to 6.05% for the week ended Feb. 17 from a two-year high of 6.73% two weeks ago. The Reserve Bank of India’s comfort zone for inflation is 5-5.5% for the current fiscal year ending March 31.