Cement may become dearer by Rs. 5 per per 50 Kg bag with the Budget proposal on Friday to raise excise duty to 12 per cent from 10 per cent earlier.

The hike in excise duty will push up the sales cost by Rs. 5 per bag. Cement makers will obviously try to pass it on to the consumers, but their ability to do so will depend upon the condition of the market where they operate.

The Budget 2012-13 proposed to hike excise and service tax by 2 per cent across the board. “Despite the abatement of 30 per cent given on the RSP there would be considerable increase in the excise duty. This additional levy coming on the back of recent hike in the rail freight would considerably impact the delivered cost of cement to the consumers and hence the construction cost would go up,’’ JK Lakshmi Cement Managing Director Vinita Singhania said.

Shree Cement managing director, H.M. Bangur said the hike in excise duty could well be offset with the abatement of 30 per cent on the retail sale price and as such, there was no cause for price hike. “We are not going to increase the price. There is no need now,” he said. The cement industry, which has been facing an oversupply situation for some years now, had urged the Finance Minister to slash the excise duty down to 6-8 per cent. It was of the view that a reduction would have encouraged it to bring the sector at par with other core and infrastructure sectors.

More In: Industry | Business