• 48 new road projects comprising of 10,000 Kms at a cost of Rs 400 bn. 25% of these roads are expected to be concretized as announced by the finance minister.

• Announcement to renovate 2 airports as well as 2 seaports at a cost of Rs 110 bn.

• Announcement to build two convention centers at a cost of Rs 10 bn.

• The Rail Vikas Project is announced at a cost of Rs 80bn.

The hike in excise duties will directly impact the bottomline of cement companies unless the companies are able to pass on the tax to the consumers. Per bag impact of this hike in excise duty is going to be Rs 2.50 per 50 Kg bag. Our interaction with the industry, however, indicates that the hike in excise duty will have to be eventually passed on to the consumers.

While the government has increased the excise duty on cement, it has also provided for a good growth in demand for cement. These new road projects by the government together with the already underway NHDP (National Highway Development Project) will go a long way in increasing the demand for cement, especially due to the fact that 25% of these roads are expected to be concretized. Rough calculations put the yearly demand for cement from the new road projects at just over 1 m tonnes. This is assuming that it takes nearly 2,700 tonnes of cement per Km to concretize a road, and that the project will be spread over a period of 5 years.

Apart from the road projects the government's thrust on infrastructure like airports and seaports will further boost demand for cement.

The maintenance of incentives on housing loans is likely to spur further investments in the housing industry. This is likely to significantly benefit the cement industry as atleast 60% of demand comes from this sector.

Budget Expectations - L&T Limited

Budget Expectations - Gujarat Ambuja Cements

Open letter to the Finance minister from the Cement industry

The CMA (Cement Manufacturers' Association) has asked for the specific rate of excise duty to be maintained instead of making it on an ad-valorem basis. Presently the excise duty on cement stands at Rs 350 per tonne. This system according to the CMA is transparent, simple and assures administrative smoothness. One of the other major requirements of the cement industry is the reduction of import duty on non-coking oil. Currently the total import duty on non-coking coal stands at 30% in comparison to an import duty of 6.5% in neighbouring China.

The CMA has also asked for the removal of the recent Rs 8 per tonne hike in limestone royalty. This hike in royalty has led to a Rs 12 per tonne increase in input costs. Royalty on limestone has risen by nearly 800% in the last two decades. Apart from the above-mentioned demands following are the other demands of the CMA.

Promotion of concrete roads in highway projects.

Promotion of cement exports by way of full reimbursement of state levies, increase in the quantum of duty free import of coal as well as by giving incentives to companies that have set up infrastructure for exports, like captive jetties.

Promotion of the housing sector by simplifying the land acquisition process, repealing the Urban Land Ceiling and Regulation Act (ULCRA), rationalization of stamp duties and the modification of Rents and Indian Stamp Acts.

Cement purchased for Gujarat relief work to be exempt from Excise duty.

The dividend tax has been reduced to 10% from 20%.

Reduction of surcharge on corporate tax.

More funds allocated to the rural roads projects.

Railway freight rates for cement reduced by 0.96%. Railway freight rates for coal increased by 0.83%.

The cement manufacturing companies can avail of a higher rate of depreciation of up to 40% on capital goods if they increase their capacity by 25%.