New Delhi: An immediate hike in the cement prices may be expected with the parliamentary panel suggesting hike in cess on cement to fund research and development (R&D) in the sector.
The step is in sharp contrast with the Union government’s earlier decision to provide relief to cement producers by relaxing excise duty on cement. The UPA Government had forced the cement producers to hold their prices for one year in a bid to cool rising prices.
An amendment in the Finance Bill for 2007-08 in Lok Sabha on May 3 said specific excise duty of Rs 600 per tonne on cement sold at more than Rs 190 a bag of 50 kg would be replaced by an ad valorem duty of 12 per cent.
Even though cement producers had agreed to hold their prices for a year, the government had allowed duty-free import of cement as an anti-inflationary measure.
Whether cement producers would pass on the benefit of partial excise relief to consumer remains to be seen. The parliamentary standing committee on commerce, in a report tabled in Lok Sabha, recommended hike in cess on cement to enable the department of commerce and industry to undertake R&D in a big way.
The panel had recommended the increase in cess last year, saying the present rate of paise 75 per tonne of cement was ridiculously low.
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