Budget update - Cement industry welcomes investments increase.

BL reported that the cement industry has welcomed the Budget proposal to increase investments in infrastructure which would drive demand for the commodity, but is disappointed over no specific measures to address the industry’s demands, particularly on tax rationalization.

Mr N Srinivasan MD of India Cements Limited said that the specific issues impacting the industry have not been addressed. While some of the macro issues have been touched upon, dynamic proposals are absent. The industry that is facing a varied mix of excise duty on the same product had hoped for rationalization of the tax structure and provision of excise duty abatement. But none of these have been addressed.

Overall, the Budget has been on expected and anticipated lines expressing intention to step up expenditure in housing, national highways, railways, rural employment guarantee scheme and infrastructure.

Mr Srinivasan said the bigger role planned for India Infrastructure Finance Company Limited and the proposed refinance facility for commercial banks lending to infrastructure projects is a positive step. The increased spending in infrastructure would translate to demand for cement.

Mr Puneet Dalmia MD of Dalmia Cement said the finance minister’s expression of interest in growing infrastructure spending and higher allocation to highway projects and rural and urban housing would translate to demand for cement.

Mr Dalmia said the target of increasing expenditure in infrastructure to 9% of GDP by 2014 means investments in this sector would be doubled that is good news for cement demand. The move to stimulate public investment in infrastructure through a greater role for India Infrastructure Finance Company Limited to increase credit availability to the sector would support demand for cement.

He, however, said the cement companies would be disappointed over the Budget proposals not addressing some of its specific demands relating to rationalization of the tax structure, bringing down import duty on coal and excise duty abatement.