India removes some duties on cement imports

India has scrapped some duties on cement imports to rein in rising domestic prices, the finance ministry said on April 03. Analysts said the decision would not boost imports because of high transportation costs, but the move was likely to add to negative sentiment for shares in cement companies already hit by government pressure to curb prices.
The government has abolished countervailing duty of 16 percent and additional customs duty of 4 percent on portland cement effective immediately, the finance ministry said in a statement.
This will cut the import price of cement by 20-25 rupees per 50 kg bag, analysts said, adding it would still be expensive to haul the bulky bags to interior regions.
Companies like Gujarat Ambuja and UltraTech, which have more sales in the lucrative western Maharashtra region, will be affected the most than producers in the southern parts where prices are cheaper, one analyst said.
Demand for cement is growing 10 percent annually as India improves its infrastructure to sustain high economic growth. But domestic capacity has not been raised resulting in supply constraints and price increases.
Cement prices, which had climbed by an average 27 percent to 209 rupees per bag of 50 kg by January from a year earlier, further rose to 220 rupees in March after government raised excise duty on high-priced cement in the budget.
The government has been in talks with companies to make them roll back the price increase. Producers have declined to fall in line, but agreed to hold prices for one year even if costs rise.
This has undermined cement shares with ACC Ltd, India's second-biggest cement producer, falling nearly 27 percent in just over a month, while third-biggest Gujarat Ambuja has slid more than 16 percent.
Rising prices of commodities have become a headache for the communist-backed government and the Congress party, which heads the coalition, has lost two key state elections with voters angry over high prices of food and other items.
"Government expects cement manufacturers, in the larger interest of consumers and for checking inflation, will take appropriate measures for moderating cement prices," the finance ministry said in the statement.