The budget move to restructure excise duty on cement may increase retail costs by around Rs 10-12 per 50 kg bag and increase the construction rate. The administration's verdict has arrived at a time when the cement business has been finding it hard to conquer the diminishing demand and growing input cost.

Mrs. Vinita Singhania, President, Cement Manufacturers Association, stated that the budget has been a disappointment and was further heightened when the Finmin declared the steps as assistance to the cement business.

"We believed for a moment that the industry's long pending demand of abatement on the excise duty has been finally heard by the Government. The specific component is very much on the higher side and this will result in the duty going up by over Rs 80 a tonne or about Rs 4 a bag at the current prices," Mrs. Vinita said.

Jammed between declining demand and increasing input rate, the cement business has been looking up to the administration for some aid.

The business had recorded a demand increase of just 2.6% during the three month period ended December 2010 from 7-8% during the same period of 2009.

As per reports, the demand has grown by around 5.4% during the nine months ended December 2010, the business is projected record an increase of just 7% in the existing fiscal as compared to 10.8%, which attained during the last fiscal.

Mr. Vindo Juneja, Managing Director, Binani Cement, stated that the Budget plan on cement business is inflationary and may increase cost of construction.

The cement industry has been asking for some aid as it has made hefty investments in raising the capacity.