Government Control & FDI in Cement in India

Since independence, the direct or indirect intervention of the government kept the industry under strict government control. Direct intervention was by controlling the production capacity and distribution of cement, while indirect intervention took the form of price control.

The basic purpose of the price and distribution control system on cement was to ensure the fair prices to producers and consumers all over the country, thus reducing regional imbalances. In 1977, higher prices were allowed for cement produced by new plants or major expansions of existing plants. In 1979, a three tier price system was introduced. In 1982, partial control was introduced by the government. A levy quota of 66.6% for sales to government and small house builders was imposed on existing units while for new and sick units a lower quota at 50% was established. Levy cement was fixed uniformly for OPC and slightly lower for PPC. The balance of 33.4% could be sold in the free open market to general consumers.

  • In 1989, industry was considered to be prepared for free market competition and all price and distribution controls were withdrawn. The cement sector was liberalized and today 100 per cent FDI is permitted in the cement industry.
  • Total FDI in the cement sector between 2000 and October 2009 stood at US$ 1.69 billion.

Most cement companies have announced expansion plans for 2010, which is expected to result in a fresh capacity of more than 50 million tonnes. Some new cement projects in the pipeline in 2009–2010 include:

Company

Project

Investment (US $ Million)

Grasim Industries Ltd

Clinker and cement Project in Kotputli, Rajasthan

265.62

Ambuja Cements Ltd

Cement plants in Dadri Uttar Pradesh and Panipat Haryana

93.75

Jaiprakash Associates Ltd

Cement Plant in Solan Himachal Pradesh

416.66

ACC Ltd

Cement Plan in Wadi, Karnataka

312.5

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