To make peace with the government, the cement companies on Friday promised to keep prices stable for a year even if the costs of inputs go up.
"The cement producers have agreed to hold the price line and not increase the prices any further in the next one year even if the costs of inputs increase," Commerce and Industry Minister Kamal Nath said.
The peace formula emerged at the a two-hour meeting the Minister and Department of Industrial Policy and Promotion officials held with the with cement manufacturers. It, however, does not address the government's demand from the cement manufacturers to bring down prices from current levels.
The companies, however, refused to roll back the recent hike which has been done because of increase in excise on 50-kg bags costing Rs 190 or more.
"If the government reduces levies they will be completely passed on to the consumers," Manoj Gaur, executive chairman of Jaiprakash Associates, who led the delegation of manufacturers said.
He said the manufacturers were open to further talks with the finance minister if they were called.
A statement issued after the meeting said Nath strongly urged the producers to reduce the prices that have risen significantly, particularly, after February 28 when an additional excise duty of Rs 200 per tonne was levied on cement costing more than Rs 190 per bag.
The Cement Manufacturers Association expressed their inability to absorb the hike in levies as they were already under pressure due to increase in costs of energy, transportation and inputs like fly ash.
The manufacturers said sustainable way to check the prices was to increase the supply faster that the demand that was growing at 10 per cent per annum.
"Additional capacity to the tune of 100 million tonnes will come on-stream in the next three years with an investment of Rs 40,000 crore thereby taking the total capacity to 250 million tonnes," H M Bangur, managing director of Shree Cement, said.
He said no real increase in prices of cement has taken place in the last one year and the recent hike was due to higher taxes.
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