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Saturday, July 28, 2007

Govt to ease cement import to cut prices

NEW DELHI: Government will ease rules on importing cement to rein in high domestic prices, which have angered both the construction industry and policymakers trying to tame inflation, a senior government official said on Thursday.

Industry Secretary Ajay Dua said the government would relax certification norms to make cements imports easier and help bridge the demand-supply gap. He said prices would fall once imports began to arrive.

"If the economy grows by 9 per cent plus, the growth in demand for cement will be 10 per cent, while supplies from domestic firms have been only increasing by 6-7 percent," Dua told reporters. "We hope to bridge it partially through imports," he told reporters at an industry conference.

In April, India cut duties on cement to increase supplies but shipments from Pakistan could not be distributed as the foreign firms did not meet certification norms issued by the Bureau of Indian Standards (BIS).

Present rules mandate that a cement firm can sell its products only after BIS officials inspect its plants and issue clearance certificates.

Dua said rules would be relaxed and BIS could be allowed to issue foreign manufacturer certificates to overseas cement firms within two months of an application being lodged.

So far Pakistani firms have expressed the most interest in exporting to neighbour India. By June cement prices in India were up by close to 10 per cent from a year ago, as Asia's third largest economy scales up infrastructure to sustain high growth rates.

In 2005/06, cement prices surged by 50 per cent in some regions, far above the rise in input costs.

Monopolies and Restrictive Trade Practices Commission (MRTPC) has ordered notices of inquiry against 14 Indian cement companies including Ambuja Cements, ACC Ltd, Grasim Industries Ltd, UltraTech Cement, Birla Corp Ltd and India Cement Ltd. If the firms are found guilty of cartelisation, Dua said, they could be penalised.

The Cement Manufacturers' Association of India estimated that output grew 9.5 per cent to 155.31 million tonnes during 2006/07. Cement makers have pledged to add 100 million tonnes of additional capacity by 2010 at a cost of Rs 400 billion.

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