In December 2014, cement prices in southern India rose by an extraordinary 40%. The main reason for this is that cement producers have recently joined forces to control cement prices by reducing production.
It costs Rs 245 per 50kg bag in the north and west but is more than Rs 100 per bag at Rs 345 in the south for institutional buyers. Retailers pay a higher Rs 375 per bag. N Nandakumar, director of CREDAI in Tamil Nadu, a southern Indian state, said that this would directly increase the cost of government infrastructure projects, and the budget housing cost would increase by 2.5% to 3% per square foot (1 square meter = 10 7639104 square feet).
At present, many government projects have been forced to slow down, and builders may also consider importing cement from Indonesia at a price of 200 rupees per bag.
At the same time, cement producers also say that low capacity utilization has put them under tremendous cost pressure. An industry insider said: "The price increase is also forced by the cost of coal imports and the increase in energy and transportation costs, but it may also be a self-destructive path." "Although the price is about 370 rupees, the additional tax, excise tax and freight cost of each bag of cement is 140 rupees, plus some other costs, the producers can not actually make much profit." Another industry insider said.
Earlier, in order to alleviate the crisis of rising domestic cement prices, the Indian government announced the establishment of an Amma cement plant on January 5, 2015. The government purchased 200000 tons of cement and sold it to enterprises, Indian provinces and individuals at a low price. Each bag costs 190 rupees. But the capacity of this cement factory is difficult to meet the cement demand of even small builders or private home builders. At the same time, Amma Cement Plant has implemented a limited purchase standard, with a maximum of 50 bags per 100 square feet and 750 bags capped. The limited quantity for house restorers is 10-100 bags. The purchase of these cements requires the local government agencies to go through the relevant quasi-purchase procedures.
To this end, the Builders Association of India (BAI), the Federation of Real Estate Developers Associations of India (CREDAI) and other associations have expressed their demand that the government take measures to control excessive cement prices in order to alleviate the domestic price rise crisis.
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