India: cement industry worried over move on freight tariff

The Indian cement sector has expressed concern about the Railway Ministry’s proposal to pass on the rising costs of fuel on to the freight tariff. Apart from the potential to drive up freight costs, industry representatives were worried about the “uncertainty” this would introduce into the freight cost.

N Srinivasan, vice-chairman and managing director of India Cements, said the move “leaves the industry in suspense” on the “frequency and basis of hike.” It is as if the freight hike will be a matter of routine, “to be effected administratively” each time fuel price goes up.

AV Dharmakrishnan, CEO of Madras Cements, said freight costs account for nearly 28 per cent of the sales cost of cement. The step to hike freight is a serious concern for the industry which depends heavily on logistics to move inputs and final product.