Ficci urges Finance Ministry to cut excise duty on cement

New Delhi, Nov 30 (UNI) Industry chamber Ficci has urged the Finance Ministry to undertake a drastic cut in the specific rate of excise duty on cement, the most critical infrastructure input.

The specific rate of excise duty at Rs 400 per metric tonne is almost 33 per cent of ex-factory price and Central and State levies taken together constitute over 70 per cent of the ex- factory price of cement at Rs 1,275 per tonne.

These levies are extremely high compared with countries in the Asia Pacific region where the total average taxes on cement is 11.4 per cent.

In its pre-budget memorandum to the government, FICCI has suggested that to motivate Indian cement industry and to produce blended cement, the excise duty structure should include a special classification, a differential lower excise duty and value added tax (VAT) rate and to provide capital subsidy for setting up facilities for manufacturing blended cement and fly-ash classifiers.

The chamber has pointed out the cement sector in India is globally competitive in technology, quality and cost of production, despite the cost of burden of poor infrastructure in Power and Coal/Rake availability.

India is the second largest cement manufacture in the world, though per capita consumption is low at 125 kg in comparison to 366 kg in Thailand, 800 kg in China, 600 kg in Malaysia and 960 kg in South Korea.

Further, state governments levy additional taxes including VAT, Royalty on coal, Octroi, duties on power tariff, Sales tax on stones/raw materials/ spares etc, increase the burden on the cement industry, which it is not able to pass on entirely to the customer.

The total tax burden in India calculating at Rs 984 per metric tonne is almost a third of the sales price for a basic infrastructure product and needs to be brought down considerably.

To adopt concrete roads in place of the currently preferred conventional bitumen roads for all national highways in view of following proven advantage of cheaper and cost-effective on life cycle cost basis, practically no maintenance, substantial saving of fuel consumption (14 per cent) by heavy vehicles on concrete road, Ficci has recommended that all the cement used in roads be totally exempted from payment of excise duty and sales tax/VAT, reduction in royalty on limestone, currently at Rs 45 per tonne.

This is higher than high value mineral like iron ore which is charged at Rs 16 per tonne. It has also suggested exemption of excise duty for cement supplied to special economic zones (SEZs).

It also said no levies/duties should be charged on the captive power generation, as cement units have to depend on captive power for continuous running of their plants.

The chamber has urged the import duty on petcoke be abolished and the definition of factory be amended to include captive limestone mines which form essential and integral part in cement manufacture.

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