The Confederation of Real Estate Developers' Associations of India (CREDAI) has sought Prime Minister Narendra Modi's urgent intervention in curbing cartelisation by cement and steel manufacturers to arrest the price hike of cement and steel.
In a letter to the Prime Minister on December 18, the apex body of real estate developers said any increase in raw material cost will lead to increase in the construction costs and overall project cost, and many developers will be forced to halt construction work thereby impacting the delivery of the projects, leading to penal consequences under RERA and other authorities, which will have a cascading effect on the homebuyers also.
CCI raids | No reason for cement companies to raise prices during COVID-19, says builders' body
"Unprecedented increase in rates of raw materials cannot be factored by any amount of planning and will increase the stress not just on real estate sector but also on infrastructure, roads/highways construction," it said in the latter, which was also addressed to Union ministers Prakash Javadekar, Nirmala Sitharaman, Hardeep Singh Puri and Dharmendra Pradhan.
It said despite challenging times in the wake of COVID-19 pandemic, cement and steel manufacturers, as a result of increased demand and cartelization by the industry, are resorting to price hikes almost every month.
In February 2020, the average cement prices rose by Rs 9 month-on-month to Rs 349 and the cement prices have increased by around 18 per cent YoY to Rs 393/bag in the third quarter of FY21.
Similarly, the steel manufacturers too have been unfairly cashing on the increase in demand for steel and have been increasing the prices every month. Steel prices have increased by more than 40 percent since January 2020.
It said the abrupt increase in the prices of cement and steel is highly "unethical" and amounts to "unfair and restrictive trade practices".
Controlling this price rise is highly essential so that all related sectors resume their operations in full swing and aid towards the economic revival of the country, it added in the letter.
CREDAI writes to PM Modi; seeks immediate relief to boost liquidity, demand among homebuyers
The body said the real estate sector, which has come out of near zero business in the first two quarters like other sectors, was hopeful of revival in the second half of the year.
It also said high raw material costs make projects financially unviable and key government missions like ‘Affordable Housing’ and ‘Housing for All by 2022’ will also be negatively impacted, causing distress not only to developers, but also to beneficiaries of these ambitious government schemes.
Meanwhile, a couple of days ago fair trade regulator CCI conducted raids on cement manufacturers ACC and Ambuja Cements, as well as on Aditya Birla group firm UltraTech Cement and Shree Cement.
The Builders Association of India (BAI), the apex body of the construction industry, alleged that price rise is a concerted effort on cement manufacturers' part to choke the cement supply. BAI has also sent a representation to the Prime Minister to constitute a Cement Regulatory Authority to curb cartelisation and undue profiteering.
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