Budget proposals to dampen cement industry’s growth
SALIM AHMED LAHORE—Federal budget 2016-17 has increased the federal excise duty on cement from 5 percent on retail price to Rs1,000 per ton. This will negatively affect the economy as the slowdown in construction activities due to increased cement prices will reduce the consumption of cement. This will further increase illegal cross border imports of Iranian cement through under invoicing and smuggling that will dampen the local industry’s growth and will reduce the contribution to national exchequer. Cement industry despatched 35.523 million tons of cement during July 2015 to May 2016 period, which is 10.55 percent higher than the corresponding period of last fiscal year.
The growth in cement consumption has been led solely by domestic consumption. Statistics shows that the overall domestic despatches in north based mills increased by 16.64 per cent to 24.667 million tons and in south based mills by 23.7 per cent to 5.37 million tons. In total, the domestic demand increased by 17.84 percent during the eleven months of current fiscal year. Quan- titatively, total domestic despatches were 30.03 million tons from July 15 to May 16 compared to 25.49 million tons during same period of last fiscal year while exports dropped by 17.41 per cent to 5.48 million tons during the first eleven months of current fiscal against 6.64 million Tons during same period of last fiscal year. Cement despatches to domestic markets during the month of May 16 increased by 22.78 per cent to 3.06 million tons compared with 2.49 Million Tons during same month last year. Exports during May 16 were 558,000 tons against 560,000 Tons during May, 15. Total despatches during May, 16 were 3.622 million tons compared to 3.056 million tons during same month last year showing increase of 18.52 percent.
Zone wise figures show that the domestic despatches by mills located in North were 2.5 million tons compared with despatches of 2.04 million tons during same month last fiscal depicting a growth of 22.31 per cent. In South the domestic despatches were 563,942 tons compared with despatches of 451,521 tons in May 2015 depicting a growth of 24.9 per cent.