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Infrastructure Today Magazine | Do more to revive cement sector: FICCI
Do more to revive cement sector: FICCI
May 06, 2020
Industry chamber FICCI has made a series of recommendations to the central and state governments on steps to revive the cement sector. These include prioritising domestic value addition for raw materials like limestone and fly ash, promotion of downstream industries like real estate and roads & highways development, streamlining of port and inter-state movement by road of raw materials and deferment of royalty, DMF and NMET by up to six months.
The unprecedented challenges arising due to worldwide pandemic COVID-19 has led to severe disruptions in the entire value chain of
severely affecting its operations and productivity. The sector that builds the nation and the economy is notably affected owing to the nationwide lockdown. While FICCI appreciates the proactive initiatives by the central and state governments to ensure continuity of operations, it contends that much more needs to be done as the operations currently are restricted only to despatch with minimal production activity underway.
Highlighting the importance of logistics for the movement of raw materials as well as finished products, FICCI recommends that port operations and inter-state movement (by roadways) should be streamlined as even after the Central Government guidelines, there are lot of restrictions from local administrations. Since logistics make up a considerable cost in the entire value chain, which get passed on to the consumers, the industry body has recommended for subsidising railway freight by 25 per cent for the next six months. To further minimise the impact of supply chain disruptions happened during the lockdown, FICCI recommends for allowing 10 per cent variations in payload limits for six months under truck transportation for the sector.
In order to ensure raw material sufficiency for the sustained operations, FICCI has recommended for guaranteed allocation of fly ash for cement industry, with participation in tenders for sale of fly-ash to be prioritised for domestic cement manufacturers. FICCI has further recommended to classify slag under class 120 of railway tariff structure, as accorded to fly ash, which is also a raw material for cement manufacturing.
FICCI has recommended that all statutory clearances like mineral license, environment clearance, consent to operate among others that are pending for renewals should be deemed to be granted for at least one year, in view of the nationwide lockdown.
Moreover, FICCI has highlighted to facilitate the movement of migrant workers from their native places to plants by providing special sanitised wagons and financial support to the workers for commuting.
Apart from logistics, subdued demand is another area of concern for the sector. As per industry estimates, India’s cement demand is expected to drop drastically in the ongoing financial year due to nationwide lockdown. In this context, FICCI suggests that government should promote and resume operations of downstream industries like real estate, development of roads, highways, rivers and canal projects, etc. FICCI further recommends for fast tracking investment in infrastructure sector by front loading investment in National Infrastructure Pipeline (NIP). This would help in rejuvenating the demand for cement.
To reduce financial burden on the sector, FICCI has recommended for provision of 10 per cent enhancement on credit limit and sanction of additional 25 per cent on current working capital limits. In addition to this, the industry body has recommended for extension of additional three months moratorium granted on payment of interest and repayment of loans. The industry chamber has further advocated for immediate disbursement of central and state subsidies, in order to improve cash flows for companies. To further reduce financial burden on sector, FICCI recommends for deferment of royalty, District Mineral Foundation (DMF) and National Mining Exploration Trust (NMET) by six months till the economic situation stabilises. As profitability and viability of companies has been severely impacted due the nationwide lockdown, FICCI recommends that the domestic coal prices should be made more competitive by lowering notified prices by Coal India Ltd subsidiaries as imported coal prices too have reduced substantially. To save the industry from additional capex expenses amidst the current scenario, FICCI has further asked the government for relaxation in SOX and NOX emission norms for cement plants for two years.
Since the worldwide pandemic has led to severe disruptions in trade and economy all over the world, post lockdown, Indian markets may get flooded with imports of cement from neighbouring countries, eroding the Indian cement market. FICCI thus, suggests that reciprocal measures should be taken (as have been imposed by these countries) to protect the domestic manufactures. Further, priority must be given to domestic value addition for raw materials like limestone and fly-ash used in cement manufacturing.
As the sector is grappling with unprecedented challenges due to COVID-19, the suggested policy interventions would help the industry to revive once the situation improves, resulting in enhanced contribution of the sector to employment opportunities and to overall economy as well as the GDP.
National Infrastructure Pipeline
District Mineral Foundation
National Mining Exploration Trust
Coal India Ltd
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