November 22, 2008

Gujarat based cement makers may be allowed to export

ET reported that Indian government seems to have gone on an over drive in its attempt to tame inflation. After partially lifting the ban on export of cement last month and allowing it to be exported from Gujarat ports, the government now wants to put in place safeguards to ensure that only companies based in the state can export cement.

The Directorate General of Foreign Trade has been asked to draft a notification banning cement produced outside Gujarat to be exported.

According to sources, as Gujarat accounts for about 90% of India’s cement exports, the move to disallow other states from exporting from Gujarat ports would not make a major impact.

An official said that "It is mostly cement manufactured in Gujarat which is being exported from the Gujarat ports. Cement exporters based in other states do not find it viable to come all the way to Gujarat to export. While allowing exports from earmarked ports might not amount to discrimination, making regulations which would only allow certain manufacturers to export while barring others could be challenged in the court."

It may be noted that a ban on cement exports was placed on April 11th 2008 as a move to check the rising price of cement in the domestic market. However, on May 27th 2008, the government decided to allow export of cement through Gujarat ports, including Mundra and Pipavav. The government explained that the relaxation was made as construction activity would slow down in the next few months because of the monsoon.

Cement companies based in Gujarat, including Gujarat Ambuja, Binani Industries, Ultratech, Sanghi Cement and Gujarat Siddhee, are understood to have benefited from the move. India exported 3.64 million tones of cement and 2.37 million tones of clinker in 2007-08.