New Delhi: Union Finance Minister P Chidambaram appears to have succumbed to the pressure of cement manufacturers on the cement price issue as he is now seeking "new proposals from them to moderate cement prices."
After several unsuccessful attempts to convince them to roll back the price hike, the Finance Minister on Thursday asked the cement companies to come up with new proposals to moderate cement prices.
But the cement manufacturers quickly spurned him, saying there is no scope for moderating the prices.
The manufacturers have stood steadfast on their decision to hike cement rates following the upward revision of excise duty on cement in the Budget.
They have also refused to toe Chidambaram’s line on the issue and are unwilling to bring down the prices in spite of tax incentives in the Budget for cements selling in a lower price band.
The Finance Ministry has been making all-out efforts to convince them to slash cement prices after they hiked the rates by up to Rs 12 per 50 kg bag following the upward revision of excise duty.
In Budget 2007-08, Finance Minister had announced increase in excise duty from Rs 400 to Rs 600 per tonne for cement sold at above Rs 190 for a 50 kg bag, while slashing duty to Rs 350 for cement sold up to Rs 190 a bag.
But after repeated efforts, the government has failed to convince them to bring down the prices. Chidambaram himself met the cement manufacturers after the Budget, but failed to persuade them to cut prices.
Later, in a meeting with Commerce Minister Kamal Nath, the cement manufacturers had agreed to not increase the prices for a year. They, however, continued to hold their line and ruled out any rollback in the prices unless the government brings down excise duty.
The Finance Ministry, too, has ruled out any rollback of the new excise duty structure, but assured the cement industry that all assistance would be provided to them in accessing raw material to raise production capacity.
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