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Industry seeks inclusion of cement in FPS list

India Coal Market Watch

December 1: In an attempt to increase export of cement and clinker to tide over the current depressed demand situation within the country, Indian cement-makers have urged the government to include cement in the list of products eligible for the Focus Product Scheme (FPS).

 The industry also came out with nine other suggestion, the implementation of which, it feels, is likely to immensely benefit the industry and the country as a whole.

 The industry pointed out that the despite having competitive strength, cement and clinker exports from India started declining from 2005-06 onwards due to a variety of reasons particularly concerning the global financial crisis, creation of capacities in emerging markets, infrastructural bottlenecks at ports/border points, absence of bulk handling and high rates of state levies and royalties for which no Cenvat credit is available.

 In addition to these constraints, the government’s encouragement for import of cement with no custom duty in the last few years have distorted a level playing field between domestic produce and imported cement, thus resulting in further discouragement of cement exports from India.

 The industry feels that due to its well-proven strengths, India has tremendous potential not only to recover but even further expand its export markets for cement and clinker.

 “With the government’s positive support and policies, exports of cement and clinker from India could firm up anything around 10% of the domestic production or 25-30 million tons per annum,” an industry veteran said.

 Expectations from govt:

 Besides seeking FPS, the industry feels that in order to enhance the overall cement export basket and thus help the government in improving its foreign reserves, the government may provide a few incentives to the cement industry so as to give considerable fillip to export of cement and clinker from India.

 The first expectation from the government is neutralisation of royalty paid on limestone for export of cement as this will be in sync with the approach that the domestic taxes are not exported.

 The second expectation is imposition of custom duty for import of cement into the country.

 There is no custom duty for import of cement into the country. This anomaly needs to be removed to offer a level playing field to domestic production vis-à-vis imports,” the industry feels.

 It also feels that for the purpose of exports, classification of cement and clinker for rail freight be reduced from the present Rail Slab 140 to Slab 120 to encourage exports from the hinterland.

 It also feels that investments made for decongesting the national ports by developing private jetties/ports for export of cement and clinker be allowed a higher rate of depreciation.

 The government may also revive the status holder incentive scheme, which was discontinued from the year 2013-14.

 Identifying the hurdles in exports from North East Region, the Foreign Trade Policy 2012-13 released in June 2012 relaxed the export obligation to two times from the previous eight times duty saved only for the North East region. However, the benefits are applicable only to those projects which applied for EPCG post-June 2012.

 The industry feels that the government may consider passing on the benefits of reduced export obligations to proponents registered under the EPCG scheme prior to June 2012 also.

 Despite issuance of detailed guidelines and instructions from time to time by the DIPP regarding Transport Subsidy Scheme (TSS) to promote industrialization in hilly, remote and inaccessible areas, there are delayed payment of TSS by several years which adversely affect the achievement of the main objective of the scheme of promoting industrialisation.

 The industry also feels that there is a need to remove the irregularities and the systemic deficiencies to ensure claims are paid by the nodal agencies promptly by speeding up the disbursement of the subsidies, which takes around 3-4 years after filing the claims, to attain the main objectives of the policy.