Lack of cement halts projects

Lack of cement halts projects
18 May 2007

Industry bodies in India state that red tape is holding up the import of cement needed for important infrastructure projects.

Mumbai’s construction industry has urged the government to remove the procedural hurdles for the import of cement into the city. The Builders Association of India (BAI), the apex body of builders and engineering construction contractors has said that a notification issued by the Director General of Foreign Trade (DGFT), stipulates that for a number of commodities being imported into the country including steel and cement, the manufactures have to register themselves with the Bureau of Indian Standards (BIS).

According to the President of BAI, P.R. Mundie, "In 2003, all procedural problems relating to steel imports were removed, but that was not replicated for cement. In this regard, the association and the industry as a whole had appealed to the Central Government and the Commerce Minister to direct the DGFT to issue a similar kind of notification as it had issued to the steel industry four years ago. This would ensure that contractors and builders would be able to import cement without delay, and that projects could go on smoothly. Just as important, is the fact that costs would be reduced to the benefit of the infrastructure and housing sectors."

He pointed out that the government had expressed alarm over rising cement prices early this year, and on January 22, 2007 had abolished the 12.5 per cent customs duty on cement imports. "But imports were not possible. So on April 3, the finance ministry abolished the 16 per cent countervailing duty and four per cent special customs duty. This supposedly made 

the import of cement competitive and feasible."

However, this was not the case because of existing DGFT notification. Compliance with these notifications is lengthy and cumbersome. The cement imported has to be actually collected by a BIS official from the manufacturer overseas and brought to India for testing. "Thus, it would take a minimum of four months to obtain registration," Mundie said.

The building and construction industry are unanimous in asserting that all infrastructure and housing works are languishing for want of cement. Despite the finance ministry’s proactive stand, cement imports involve many long and trying procedures. However, in the interests of industry and the economy as a whole, it is therefore felt that the present stipulation should be done away with and construction bodies be allowed to import cement for use in their projects, pending  the processing of applications from manufacturers or exporters of cement.

Sources said, "With the process of consolidation taking place in the cement industry over the last four to five, just three cement groups control 46.6 percent of the market share in India. Cement prices are thus controlled by them as a cartel and since 2006 prices have spiraled from Rs. 164 per bag to more than Rs. 250 per bag. This has a detrimental effect since construction is an important constituent of the economy that accounts for over 5.2 per cent of the GDP. The construction industry has backward and forward linkages to more than 150 industries and any slowdown in construction activity has a cascading effect on all of them. It is also the second biggest employer of unskilled workers employing about 18 million people directly and 14 million people indirectly."

Published under Cement News