Cement & Lime

Apart from demand-supply disparity the industry is suffering from rising input cost. Increased power, fuel price (diesel), and transportation cost raise the cost of production.
The cement industry is characterised by overcapacity. Currently, there is a large mismatch between supply and demand as the demand from the government has not materialise. Economic slowdown has resulted in dampening construction activities and falling industry growth. Weakening of rupee against dollar and high interest rate of borrowing are some of the constraints of slow growth. But, the industry has lower capacity utilization. Acute shortage of coal supply has forced many companies to resort to open market purchase or import, resulting higher cost of production. There is increased power and fuel price.
Though price of imported coal has declined lately, the benefit is offset by rupee depreciation. Increase in freight cost by railway is due to increase in surcharge and cess. Problems of availability of wagons for railway transportation, high tax from government add to cost escalation. With high level of levy, infrastructure constraints at port, government's policy to encourage import of cement (with zero custom duty), the exports of cement and clinker are declining. Since last couple of years the industry is facing added cost of fly ash from thermal power plants, which was earlier obtained free. This results in higher cost of production.
The government will take growth oriented policies to increase infrastructural spending, which will raise the demand for cement. This will increase growth in infrastructural sector including housing, roads, ports, airports, and irrigation projects. Increase in per capita cement consumption will also mean government's initiative on more encouraging schemes for housing with income tax relief, constructing concrete road (with white topping), and canal lining. The government can provide tax incentive for promoting blended cement for conservation of mineral resources, waste use, and lower carbon emission.