Cheaper imports from Pakistan and high tax at home hurt Indian cement industry, elucidates Rituraj Baruah
Cheaper cement imports from Pakistan are hurting the domestic industry, which is already reeling under the impact of low demand and high GST, cement producers in Punjab and Kerala claim.
There's been no customs duty on cement imports from Pakistan since 2007, making it competitive in comparison to the Indian product, especially in the states bordering Pakistan.
"Pakistani cement is almost 10-15 per cent cheaper than Indian cement," Shailendra Chouksey, president of Cement Manufacturers Associations told IANS.
Data from the Directorate General of Foreign Trade's website showed that total imports of portland cement during 2017-18 (April-March) was 16.82 lakh metric tonne. Out of the total imports, industry sources say, 76 per cent -- around 12.72 lakh tonne -- was imported from Pakistan.
In Punjab, the market rate of portland cement is Rs 280-300 per bag (1 bag = 50 kg), while the Pakistani import is sold at Rs 240-250 per bag, traders said.
Although market players across the country have not been affected much so far due to the high imports, industry in states bordering Pakistan and the coastal state of Kerala have been severely hit, industry sources said. Imports to Kerala come from Karachi via sea.
Cement producers say the domestic industry is self-sufficient and any further import only renders a significant amount of the domestic produce futile.
"A major concern is that Indian capacity is already very underutilised. We are hardly utilising 65 per cent of the Indian capacity. The remaining 35 per cent remains unutilised," Chouksey said.
Cement imports from Pakistan for the period December 2017 and March 2018 have witnessed a growth of 24 per cent on a year-on-year basis at 4.55 lakh tonnes, up from 3.68 lakh tonnes.
"Domestic cement industry which has invested in anticipation of growth in demand, but is losing revenue of Rs 500 crore to Pakistani cement imports," an official working with a cement major told IANS.
While cement imports from Pakistan, market players say, have been unabated, exports from India to Pakistan stands no chance as it attracts 11 per cent customs duty.
Although cement manufacturers have sought the imposition of 11 per cent Basic Customs Duty on the imports, as imposed by Pakistan, the government's reaction has not been "favourable", the stakeholders said.
Apart from cheaper imports, the Indian cement producers have to deal with a high rate of Goods and Services Tax in the country, at 28 per cent.
"We were very hopeful that this 28 per cent will get reduced to 18 per cent. Cement is a very essential commodity," Chouksey, who is also a whole time director with JK Lakshmi Cement, said.
The industry hopes that the two-day GST Council meet scheduled on September 28-29 may announce the much-required relief.
(The views expressed are strictly personal)