The Cement Manufacturers Association, in a pre-budget memorandum to the Centre, has sought a reduction in taxes and levies to make cement affordable for housing and infrastructure projects and to cope with international competitors.
Cement is one of the highest taxed essential infrastructure input in India with Government levies and taxes together constituting more than 60 per cent of the ex-factory price. Compare that with 17 other countries in the Asia-Pacific region where the average tax on cement is 11.4 per cent, with Sri Lanka at a high of 20 per cent, the industry has said.
The industry has sought abatement on excise duty levied on the maximum retail price of cement. Such abatement is provided on all products where levy is linked to MRP.
The Centre has levied a three-tier system of excise on cement at 12 per cent for a 50 kg bag at an MRP of Rs 190 to Rs 250, a specific excise duty of Rs 350 a tonne on cement less than Rs 190 and a specific rate of Rs 600 a tonne on cement costing more than Rs 250 a bag.
The industry has asked for 55 per cent abatement as suggested by the NCAER in its report of 2005. White cement gets 35 per cent abatement, the memorandum said.
The manufacturers have also asked the Government to bring down the rate of VAT on cement and clinker to 4 per cent against 12.5 per cent now.
The association has suggested that the 5 per cent customs duty on coal and pet coke be abolished to sustain cement production. The industry needed 25 million tonnes of coal in 2006-07 but coal companies supplied only 14.43 million tonnes against an agreement to supply 15.48 million tonnes. The industry had to look to the open market, imports and alternatives like pet coke.
Also, cement imports are allowed at zero import duty. The industry has suggested that a countervailing duty may be re-imposed to the extent of excise duty to enable domestic players compete on a level playing field.