Live Budget 2013-14: New road projects will boost cement demand

Moneycontrol Bureau

Finance Minister has announced 3000 kms of new road projects in Gujarat, Madhya Pradesh, Uttar Pradesh and Maharashtra. This will boost cement sector performance in 2013-14. The sector has been grappling with sluggish demand and overcapacity since past six months.

The anouncement comes as a big relief for cements companies like ACC Ltd, Ambuuja Cements and UltraTech Cement among others which have enhanced capacities earlier and have said they will add capacities only after assessing demand-supply scenario.

Meanwhile, this is what the sector had expected from the Union-Budget 2013-14

Reduction in excise duty Either status-quo or reduction in excise duty from 12 percent to 6 percent. Industry is going through tough time with demand just started to having  picked up. If the levy goes up, it will be difficult to pass on burden to consumers who would not accept a sudden hike in cement price.

Levy customs duty

Levy of customs duty on cement imports into India

Introduce tax free bonds

Tax free bonds, infra debt funds and an exhausting policy for developing public private partnership (PPP) projects that will propel growth.

Given the rapidly growing demand for housing from the low middle income population, there is a need to promote low cost housing schemes.

Some of the other issues which need government's immediate attention are – lowering of high duty rates.

It is requested to provide a level playing field; by levying basic customs duty on cement imports into India. Alternatively, import duties on goods required for manufacture of cement should be abolished and free movement be allowed without levy of duty.

'Declared Goods' status

The industry is one of the basic and core infrastructure industries. However, unlike other similar industries/goods, cement is subjected to higher rates of taxation. It is proposed that cement be stipulated as 'Declared Goods' under section 14 of Central Sales Tax Act so that it is put on an equal footing with other core sector goods like coal, steel, crude oil, jute and cotton yarn.

 

The cement sector would also be hoping for some announcements on infrastructure projects such as road, freight corridor, irrigation etc, which would boost cement demand.