Favouring reduction in the central excise on cement, the Industry Ministry has asked India’s manufacturers to submit their proposals seeking relief in the coming budget.
"If cement production and demand have to increase, the duties have to be rationalised," Department of Industrial Policy and Promotion Secretary Ajay Dua said at the annual session of the Cement Manufacturers’ Association here today.
He said the DIPP had taken up the issue last year with the Finance Ministry. "We are certainly willing to support rationalisation of central excise duty on cement and it should not continue at the current level," he said.
He pointed out that about 30 per cent of the sale price is accounted for by the central and state taxes as against 20 per cent in China and 10 per cent in Malayasia.
"Taxes need to be brought down to the level of China," Dua said.
The support was much more required in case of Portland Pozzolana Cement (PPC) where use of fly ash is more than 20 per cent, Dua said.
The Secretary asked the industry to submit its proposals to DIPP within 3-4 days so that it could be taken up further with the Finance Ministry.
On the issue of extraordinary rise in prices, he said the increase must be gradual and in line with rise in raw material prices. He asked the industry to find resources, other than internal surplus, to fund its expansion plan.
In order to grow at a rate of 11-11.5 per cent in the 11th five year plan, Dua hoped the industry would "rise to the occasion" and would be able to increase its capacity by 120 million tonnes. However, he said the industry needs to find Rs 55,000 crore to fund expansion of such a magnitude. While the industry would require Rs 35,000 crore to add new capacity, Rs 10,000 crore would go for setting up captive power stations of about 2,000 MW, he said, adding that the remaining would be required to upgrade existing capacity.
Given the nature of capital market and buoyancy in the banking sector, Dua said financing the industry’s expansion plans would not be a matter of concern.
Dua said coal requirement for this sector would double from the current 29 million tonnes to 58 million tonnes to meet the demand for future expansion.
"While priority is given to the steel and power sectors in allotment of coal blocks, it should be ensured that inferior blocks are not allotted to the cement sector," Dua said.
He also asked the industry to look at option of lower grade of limestone to produce cement.
Stating that it is "pitiful" that only 5 per cent of cement is transported in bulk in India, Dua favoured incentivising bulk transportation of cement as against the practice of using bagged cement.
Dua asked the industry to submit its proposals also for incentivising the usage of waste, including fly ash as well for bulk transportation of cement.