The cement industry has asked for the simplification and rationalisation of excise, duty-free import of fuel and raw materials and correction of skewed import policies relating to cement, according to Mr M.A.M.R. Muthiah, President, Cement Manufacturers Association.

Rising cost of imported coal, and raw materials such as gypsum are impacting the industry, which is a key component in infrastructure development. The prevailing policies tax import of fuel and raw materials, but allow duty-free import of the final product cement. The cement industry body is hoping that the Government corrects this imbalance in the 2012-13 Union Budget, he said.

The 5 per cent customs duty on imported coal has to be waived, as also the customs duty on pet coke, gypsum and other inputs, he said. Particularly considering that cement is a core industry, but is not given priority status in coal allocation and is largely dependent on imported coal for more than half its requirement, he said.

Excise duty

Excise duty should also be brought down from the prevailing levels and the levy should be simplified. If steel attracts just 8 per cent why should cement, a closely allied product, be subject to not just a higher excise duty of 10 per cent, but also an additional specific component of around Rs 160 a tonne. This is a complicated system with ad valorem rates and specific rates linked to cement prices. The excise duty should be simplified and limited to either specific rate or ad valorem.

Industry representatives pointed out that the specific component ranges from Rs 80 a tonne to Rs 160 and on clinker Rs 200 a tonne.

Another crucial issue is to treat investments in waste heat recovery systems being implemented in cement plants on par with renewable energy in terms of incentives like income tax concession and accelerated depreciation. Each cement plant has a potential to generate over 4-5 MW from conserving the exhaust heat, Mr Muthiah said.

Fly ash

Similarly, fly ash, a waste from power plants, which was to be supplied free to cement plants, is now being tendered out by some States for Rs 500-600 a tonne. When taking into consideration the cost of transport and blending with cement, the costs are comparable to clinker. This issue has to be addressed as the concept of giving fly ash for blending was built on the principle of ‘polluter pays.'

The industry is also pushing for policies to encourage establishment of concrete roads, which other than benefitting the industry, is cheaper and more efficient option in the long run compared to bitumen surfaces, he said.

(This article was published on February 8, 2012)
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