Here’s how GST would impact the cement industry


Although the winter session could be a washout in term so passage of goods and services tax (GST) but there is a hope that GST could be a reality in 2016.

CNBC-TV18’s Menaka Doshi in a special series ‘Hello GST’ analysis the impact of GST on the cement industry and the bill may not prove to be a positive for the industry.

Following the worries expressed by V Lakshmikumaran, Managing Partner, Lakshmikumaran & Sridharan.

He said: “Cement India is the second largest producer in the world and in the next 10 years, India can become the net exporter of cement and clinker. The main raw materials for cement are limestone, coal and electricity. Limestone, for quarrying, the cement companies have to pay royalty to the state governments and for coal, apart from the GST, there will be levy of clean energy cess which is not available as a credit because it is not part of the GST regime subsumes. So, therefore, as far as the cement industry is concerned, these two factors will continue to be outside the GST and therefore, it has to be absorbed as cost of the cement production.”

“If GST is levied on electricity, again it is going to increase the cost. I hope all this is available as a credit while paying GST on the cement,” he added.

He observed that if one looked at where the cement industry was located in India, most of the manufacturers are nearer to the limestone quarries whereas the utilisation is throughout India and therefore the transport cost of this cement from the manufacturing place to the inducers is going to be huge.

Moreover, he added “The service tax paid on the transportation cost, etc. if it is not made available at the dealers’ level, all becomes cost of the cement production and unless and until the rates of GST on cement is kept at the level of not more than 12 percent, it is going to have adverse impact as far as the infrastructure industry is concerned.”


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