INDIA: Builders want govt to rein in cement producers

India is the world's second largest producer (224.4 million tonnes per annum ) of cement , after China , in the world. Tamil Nadu is the third largest cement producing state , after Andhra Pradesh and Rajasthan , in the country. But ironically, cement prices in Tamil Nadu are among the highest in the world.

The reason : Against an installed capacity to produce 34.38 million tonnes of cement per annum in the state , the 19 major cement plants and four small plants manufacture only 20 million tonnes per annum . "Underutilization of the installed capacity , cartelization , syndication and rationing of supply have resulted in a rapid rise in cement prices ," noted NNandakumar ,secretary of theTNchapter of the Confederation of Real Estate Developers Association of India.

CementcostsRs 300 per 50kg bagin Tamil Nadu . In the north , it is available at Rs 190 per bag , he noted . Cement being a decontrolled commodity , state and central governments can do little to regulate prices . "But the state , which gives licence for mining limestone , has every right to interfere if the cement manufacturers indulge in unfair trade practices . If they do not fall in line , the issue should be escalated to the Competition Commission of India," opined Nandakumar.

Rising cement prices had put the brakes on government infrastructure projects in the past . When the erstwhile Kalaignar Housing project was stalled owing to spiralling cement prices a year ago , the then DMK government issued a take-over warning to private cement manufacturers . The suppliers wriggled out of the issue by offering cement to the Kalaignar housing scheme at reduced prices . But the common man was left in the lurch even then . The government did not bother much.

While cement consumption is growing at 7% per annum worldover ,in India it is increasing at 9%. The volume of cement entering the international trade is just 6-7 %of the total global production . The rest is consumed in the respective domestic markets.

Large-scale imports are the only immediate solution to tide over the present crisis , opined a senior government official. Tamil Nadu Cements , the state-owned cement supplier , is gearing up to import about five lakh tonnes of cement, out of which, about one lakh tonnes will be imported in the first phase . The government needs to speed up this process.