Indian cement producers demand reduction in excise duty

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India: The Indian Cement Manufacturers' Association (CMA) has demanded a reduction in the excise duty for building materials from 12% to 6-8% in the next Indian Union Budget.

"To encourage cement industry and to bring it at par with other core and infrastructure industries, the excise duty rate be rationalised from 12% to 6-8%," said the CMA in a budget memorandum to the Finance Ministry. The CMA added that the excise duty rates on cement are amongst the highest, beaten only by the rates on luxury goods such as cars. It admitted that the Indian industry suffers from an 'excess of surplus capacity'.

"The levies and taxes on cement in India are far higher compared to those in countries of the Asia Pacific Region. Average tax on cement in the Asia Pacific Region is just 11.4%, with the highest levy of 20% being in Sri Lanka," said the CMA. According to the CMA the Indian cement industry had a production capacity of around 340Mt/yr in March 2012.

The CMA also pitched the idea of levying basic customs duty on imports of cement. Alternatively, it suggested that the import duties on goods required for manufacture of cement be abolished.

At present, the import of cement into India is freely allowed without having to pay basic customs duty. However, all the major inputs required for manufacturing cement - such as a limestone, gypsum, petcoke - attract customs duty.


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