New Delhi, Feb 28 : Putting up a brave face to the 10 per cent reduction inimport duty on cement and clinker, the domestic cement industry said it isconfident of facing competition. "It is commercially unviable for any Asiansupplier to compete on price in the Indian market, unless they resort todumping which is sell off their excess capacity at prices lower than theircost of production. Any such action would inevitably attract anti-dumpingmeasures, as prescribed by the WTO," the Cement Manufacturers Association(CMA) said in a press release.The reduction in import duty will help to establish the fact that Indiancement industry is cost competitive and that even the current pricesprevailing in the market are inadequate to provide a fair return on capital,it said. Gujarat Ambuja chairman Suresh Neotia said the government was undera wrong impression that domestic prices are high. "There was no need toreduce custom duty. The domestic prices have subdued a little bit of late,"he added.
However, Orissa Cements Ltd (OCL) president MH Dalmia told The FinancialExpress that the reduction in import duty would have an impact in domesticprices which firmed up only recently. "However, the impact would be feltmostly in port cities like Mumbai, Chennai and Kolkata where cementrequirement is higher. But due to high costs of transportation inland areaswould not find it cheaper to import cement," Mr Dalmia added.
ACC managing director TMM Nambiar said that though the cement industry wasnot afraid of any competition, it was worried about the excess cementcapacity in the countries neighbouring India. He said that the decision toreduce the import duty on white cement would increase the chances oftampering. He added that India also has a surplus capacity and hence, thegovernment should have done away the export duty on white cement. "We canpush for 10 million white cement export," he remarked.
Internationally, export/import represents only 6 per cent of globalconsumption and is confined to markets where there is a shortage, whereasthe Indian cement industry is fully geared to satisfy any growth in cementdemand in the country.
The domestic cement industry has built up a sector that is globallycompetitive in technology, quality and cost of production. The ex-factorycement prices in India are amongst the lowest in the world, said the CMA.This has been achieved even though transaction costs impose an additionalburden in India due to poor infrastructure. Turn around time for both roadand rail transport remains much higher, than international levels, the levelof taxation represents one-third of the ex-factory price and the real rateof interest is much higher.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
