The roll back of the excise duty by Finance Minister Pranab Mukerhjee is likely to result in prices of cement and steel going up, leading to overall rise in housing cost for those dreaming of owning a house. Industry players said cement prices were likely to go up by around Rs.8-10 a bag of 50 kg, while the prices of steel were likely to go up by around Rs.600 a tonne.
Industry players said there was likely to be cost increase of about Rs.5 a bag only because of the excise duty hike. The price rise in diesel and petrol would affect our input cost as it was an energy-incentive sector.
Barak Valley Cement Managing Director K. Chamaria said the prices in Northeast were expected to rise by Rs.10 a bag as demand was very high in the region compared to supply. As per the budget proposal, the excise duty on all non-petroleum sectors had been hiked to 10 per cent from 8 per cent. For the cement industry, for every 50 kg bag with a retail price of less than Rs.190, the excise duty would go up to Rs.290 a tonne from the existing Rs.230. For bags costing over Rs.190, the excise duty was hiked to 10 per cent from 8 per cent on cement and cement clinker.
ACC Managing Director Sumit Banerjee said the increase in excise duty on cement as well as petrol and diesel would have some inflationary impact. Consultancy firm Ernst & Young (E&Y) said manufacturers might have to absorb some amount of duty hike as supply in the sector exceeded demand. The cement manufacturers' ability to pass on the increase to the consumers should depend on the demand-supply scenario, E&Y cement industry leader Nitin Gupta said.
On the steel front, Steel Authority of India Ltd. (SAIL) Chairman and Managing Director S. K. Roongta said that with two per cent increase in excise duty, steel prices in the country might go up by Rs.500-600 a tonne.
JSW Steel Director Sales and Marketing Jayant Acharya said the hike in duty would impact only certain project-based consumers since other user industries would get it refunded.
Steel prices are already witnessing an upward trend on account of an improvement in demand from sectors like realty and automobiles. Domestic steel prices are in the range of Rs.26,000-37,000 a tonne. Steel prices are likely to rise further in the months.