Cement Exports Allowed through Gujarat Ports

By: Bharat Ratna

Cement industry is one of the main beneficiaries of the infrastructure boom. While on the one hand several big and small cement companies are actively considering expansion plans in anticipation of further growth in demand for cement, on the other, a phase of acquisitions and mergers among the existing players is also not being ruled out in the immediate future

The Government has eased the ban on cement exports from the ports in Gujarat. Gujarat accounts for almost 90 per cent of the country’s cement exports.

The Director-General of Foreign Trade has also issued a notification to give effect to the Government decision.

“The existing ban on export of cement and cement clinkers shall not be applicable to export of cement from ports of Gujarat,” the DGFT notification said. 

The major cement manufacturers in the State include Gujarat Ambuja, Binani Industries, Ultratech, Sanghi Cement and Gujarat Siddhee. There are also around 90 operational mini cement plants in the State.

Government bans cement exports to stem price rise

Earlier the Central government on April 11, 2008, decided to ban cement exports from the country in an apparent attempt to improve supplies in the domestic market and stem cement price rise during the coming months.

“We have decided to ban cement exports. The order would be issued today. April-June is a period when demand for cement in quite high.

“This move would improve availability of cement,” Mr Kamal Nath, Union Commerce and Industry Minister, told reporters soon after he announced the annual supplement to the foreign trade policy.

Official sources said that the Government was, through this move, trying to send a signal that it would step in to address inflationary concerns.

Domestic prices unlikely to be impacted

However, analysts contend that the ban on cement exports was unlikely to have any major impact on the domestic prices as the industry’s annual export was not more than two per cent of total production.

It was felt that companies need not reduce price at all as domestic demand was quite strong.

“Cement production in fiscal 2008 was about 166 million tonnes, while all the cement companies put together would have exported just four million tonnes for the entire fiscal,” said an analyst.

The high price realisation in the domestic markets had forced many companies to curb exports on their own.

“The average domestic prices are hovering above Rs 3,200 a tonne whereas in the exports market it is around Rs 2,200 a tonne,” said a cement company official.

Duty scrapped

To ease supply constraints and facilitate imports the government in January 2007, scrapped duties on cement imports and followed it up by abolishing the 16 per cent countervailing duty.

To discourage cement exports, the government had recently withdrawn Duty Entailment Pass Book benefit on cement.

Lean monsoon season

Speaking to reporters on 27 May, 2008, the Commerce Secretary, Mr G. K. Pillai, said that as domestic demand for cement is usually low during the monsoon season owing to slowing down of construction activities, exports have been permitted.

“During the monsoon months of June and July, very few people construct houses and the demand will come down. That also helps to keep the market going,” he said.

The Government had banned cement export in its bid to rein in rising inflation.

Cement companies exporting from Gujarat ports traditionally cater to the Middle-East market, he said and added that approximately two million tonnes of cement are exported annually from Gujarat.

‘This is the Right time’

Stating that the Government decision has come at the right time, the President of the Cement Manufacturers Association (CMA), Mr H. M .Bangur, said “We have enough cement to cater to the domestic requirement.” “Even after exports, we will have surplus cement,” he said.

India exported 3.33 million tonnes of cement during April-February 2007-08 down 38.78 per cent over the corresponding period last year, according to CMA data. The major cement exporters include Ambuja Cements and Aditya Birla group’s Ultratech. The annual production was around 170 million tonnes last fiscal, while the installed capacity reached 196.22 million tonnes as on April 30, 2008.