The four per cent hike in entry tax on clinker has put the small cement units in Assam in a quandary, with some even fearing the worst.
In the state budget, chief minister Tarun Gogoi had proposed to hike the entry tax on clinker from 2 to 6 per cent, applicable only to small and medium units.
Clinker is the main raw material for cement, with Meghalaya catering to a bulk of Assam’s requirement.
Industry sources said the proposal to raise the entry tax would adversely affect the small grinding units in the state. “It will increase the cost of production of the small units by Rs 7-10 per bag. At present, the small units are already selling cement at a lower rate — Rs 25-35 (per bag) less than the cement produced by the large units. Given the budget proposal, there is an apprehension that the small units might not be able to bear the additional cost burden and become unviable,” a source said.
The total procurement of clinker from outside Assam is estimated at 18 lakh tonnes per year, of which 24 small units procure 4.75 lakh tonnes.
Incidentally, two large cement manufacturers, Cement Manufacturing Company Ltd (Star Cement) and Meghalaya Cement Ltd (Topcem), have been exempted from the tax. CMCL and MCL have units at Sonapur and Amingaon respectively in Assam.
“The 24 units have made an investment of over Rs 400 crore in the state and employed more than 3,000 people, directly or indirectly, whereas the two large units have invested Rs 400 to Rs 500 crore and generated jobs for about 600 people,” the source said.
North Eastern Small Scale Industries Association state president Sailen Baruah said, “Increase in the entry tax on clinker will be detrimental to small and medium units. On the one hand, the government talks about promoting MSMEs, yet on the other, it proposes an additional tax burden, which may even lead to closure of the small and medium units”.
Dilip Goenka, director, KD Cement (Suraksha brand), said, “The government has accorded mega project status to large cement manufacturers, exempting them from entry tax, but imposed the same on small units. This is contrary to its vision of development.”
Sunil Agarwal, president of Surya Gold Cement, said, “The announcement is indeed discouraging for the medium and small scale entrepreneurs. The cost of production incurred on each bag of cement will go up and ultimately affect consumers.”