Our Bureau

New Delhi, Dec. 21

The Ministry of Commerce and Industry has favoured a reduction in Central excise duty on the cement sector in the run-up to the coming Budget.

"If cement production and demand have to increase, the duties have to be rationalised," the Department of Industrial Policy and Promotion (DIPP) Secretary, Mr Ajay Dua, said at the annual session of the Cement Manufacturers' Association here on Thursday.

Mr Dua 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 added.

He said that about 30 per cent of the sale price is accounted for by Central and State-level taxes against 20 per cent in China and 10 per cent in Malaysia. "Taxes need to be brought down to the level of China," he added.

The support was much more required in case of Portland Pozzolana Cement (PPC), where use of fly ash is more than 20 per cent, he said.

The Secretary asked the industry to submit its proposals to DIPP within three to four days so that it could be taken up further with the Finance Ministry. On the issue of extraordinary rise in prices, he added that the increase must be gradual and in line with rise in raw material prices.

Expansion plan funding

Asking the industry to find resources other than internal surplus to fund its expansion plan, Mr Dua said that he was hopeful that the industry would be able to grow at a rate of 11-11.5 per cent in the Eleventh Plan. Given the nature of capital market and buoyancy in the banking sector, the Secretary said financing the industry's expansion plans would not be a matter of concern. Mr Dua said coal requirement for this sector would double from 29 million tonnes to 58 mt 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," he said.

(This article was published in the Business Line print edition dated December 22, 2006)
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