Mumbai, Feb. 26: Cement prices may go up on account of the excise duty hikes on the commodity as well as on petrol and diesel, which are key inputs of the industry.

Pranab Mukherjee’s decision to raise the outlay in infrastructure will benefit the industry in the form of higher demand.

Industry analysts said the move on the excise duties and petroleum products front would result in manufacturers passing on the same to its consumers. “As the demand-supply situation is balanced in the northern, western, central and eastern regions of the country, the excise duty impact is likely to be passed on. Cement prices could turn dearer in these regions by Rs 5-7 per bag,” Rupesh Sankhe, cement analyst at Angel Broking, told The Telegraph.

Mukherjee enhanced the standard rate of duty to 10 per cent from 8 per cent because of which the specific rates of cement and cement clinker went upwards.

At present, the excise duty on packaged cement is Rs 230 per tonne where the maximum retail price is less than Rs 190 per 50kg bag.

This duty will now go up to Rs 290 per tonne.

Similarly, for cement with a retail price of over Rs 190 per kg, the excise duty will jump to 10 per cent of retail sale price from 8 per cent of the retail sale price.

In the case of cement clinker, the revised rate stands at Rs 375 per tonne from Rs 300 per tonne prevalent presently.

While the industry was disappointed by these excise duty changes, sources said that the stress on infrastructure via higher outlay as envisaged by finance minister would help the cement sector in the form of a better demand. Delivering his budget speech, Mukherjee said he had provided Rs 1,73,552 crore, which accounts for over 46 per cent of the total plan allocations, for infrastructure development. The government has targeted construction of national highways at the pace of 20 km per day and for the year 2010-11, the allocation for road transport will increase over 13 per cent from Rs 17,520 crore to Rs 19,894 crore.

Reacting to the focus on infrastructure and its impact on the cement sector, Sumit Banerjee, managing director, ACC, said that “cement industry is quite likely to be favourably impacted by the provisions to continue the thrust on infrastructure development and roads which account for more than 46 per cent of the total plan allocation’’.

He, however, added that the increase in excise duty on cement as well as on petrol and diesel would have some inflationary impact.