Cement companies refuse price-cut without reduction on excise dutyCement companies refuse price-cut without reduction on excise duty
Apnaloan.com Research Bureau
10 May 2008
While ACC Cement which accounts for over one-tenth of the market decided to freeze prices for 2-3 months, in response to government's efforts for a price cut, other cement companies refuse to follow the move.
The cement companies have demanded 'concrete' assurances from the government on the reduction of excise duty. The companies want the Centre to allow them 55 per cent abatement on the duty paid by them.
Currently, the cement companies pay an excise duty of Rs. 350 a tonne in case the maximum retail price for a 50-kg cement bag is Rs. 190 or less. For the more expensive varieties, the levy is Rs. 550-600 a tonne.
Most industry players say that decreasing price is an independent decision of the company concerned, however if the government gives some relief on excise, the reduction benefit will be passed on to the consumers.
In the credit policy meeting on April 29, Finance Minister Chidambaram announced an increase in the excise levied on cement bags that cost over Rs. 250. Cement companies have not yet increased prices as the effect was estimated at Rs. 2-3 per bag.
Currently, the average price for a 50-kg cement bag is at Rs. 230, compared to Rs. 165 in 2006. In Mumbai, the price of a bag of cement has shot up from Rs. 260 to Rs. 275 in 2008.
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