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REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 182] NEW DELHI, THURSDAY, AUGUST 1, 1974/SRAVANA 10, 1896

Separate paging is given to this part in order that it may be filed

as a separate compilation

MINISTRY OF INDUSTRIAL DEVELOPMENT

RESOLUTION

New Delhi, the 1st August 1974

CEMENT PRICES

No. 1-10/74-Cem.—In their letter.No. 18(3)TAR/2, dated the 28th April 1972, the Government of India, being of the opinion that a comprehensive review of the cement industry was called for in view of the significant changes that had taken place since the industry was last studied by the Tariff Commission in 1961, requested the Commission to undertake such a study with a view to ensure the development of the cement industry in a measure and in a manner that would enable the requirements (including exports) to be met adequately at a minimum cost to the economy. The Government had also requested the Tariff Commission to make recommendations of an interim nature pending the submission of their final report, In March, 1973, the Commission made an interim report which was restricted to an assessment of the increase in cost to 'be provided for as immediate relief to the industry. The Commission recommended a uniform interim increase of Rs. 10 per tonne for all the units in production and it was accepted by the Government of India in their Resolution No. 1-23/73-Cem., dated the 15th Sentem- "ber, 1973. The Commission on the conclusion of its enquiry has now submitted its final report.

2. The main recommendations of the Commission are as under:—

1. There should be a uniform ex-works retention price for the existing units of the industry which has been determined as Rs. 136 per tonne;

(1129)

2. Units holding industrial licences/c.o.b. licences which are in the proces: of being set up and which are expected to come into productior •shortly, should be granted an ex-works retention price of Rs, 146 pei tonne. Expansions falling under this category may be granted t price of Rs. 141 per tonne;

3. Units which are presently in the "Letter of Intent" stage and which are expected to come into production during the last qouple of years o] the Fifth Plan may be granted an ex-works price of Rs 161 pel tonne. Expansions falling under this category may be granted an ex- works price of Rs. 149 per tonne;

4. The grant of a 'special price as at present to M/s. Travancore Cements,

Kottayam and Assam Cements, Cherrapunji may toe discontinued;

5. The ex-work-s price recommended should be in force for a period of about

five years i.e. till 31st March, 1979;

6. It is not necessary to fix a differential price for portland blast furnace slag cement and portland pozzolanic cement based on the use of fly ash;

7. Unite which are obliged to use furnace oil with the prior approval of the Government for want of adequate supplies; of coal should be compensated, fpr the additional expenditure involved in the use of furnace oil;

8. Out of the ex-works prices recommended by the Commission, the pro- ducers will be required to pay an amount of 50 paise per tonne into a, separate "Research Account" to be at the disposal of the Central Government to be utilised by the Government for assisting the Cement Research Institute of India and such other Centrally organised research organisations, which in the opinion of the Goverpment of India may toe doing useful R & D work in the interest of the cement industry as a whole;

9. In areas where district towns, are not connected by railway, freight pooling should cover road transport of cement to such district towns also;

10. Small plants set up in remote areas with difficult and comparatively inaccessible terrain may receive assistance from the freight pool to- the extent of the difference between the all India average freight In the f.o.r. destination price and freight incurred on trie transport of cement produced by such units to nearby areas;

11. Cost of transport of clinkers, slag and fly ash to grlnding/inter-grinding units and cost of transport of cement from the grinding units to onward destinations should also be brought within the purview of the freight pool, provided the movement is in the logical forward" direction and approved by the Cement Controller;

12. The system of quarterly fixation of packing charges is working satis- factorily and no change therein h considered necessary;

13. Ex-works prices should be subject to automatic escalations for variation in major elements, of costs viz., (i) wages and dearness allowance (ii) price of coal (iii) power tariff and (iv) freight on coal and limestone; 14. Out of the ex-works price, the producers should pay an amount of Rs. 4 per tonne (subject to tax) into a separate "Development and Rehabilitation Account" to be held jointly with the Government to be utilised for rehabilitation purposes;

15. A Cement Development Fund may be set up for grant of interest free loans on long term basis with a moratorium for repayment for setting up additional capacity. This fund may be created partly by a levy on the cement produced and partly by a matching grant by Govern- ment. In case the setting up of such a fund is found to be unneces- sary, it would merely suffice to add a further element to the price of Rs. 161 per tonne for new units to take pare of the servicing charges on this additional investment.

3. Government have carefully considered these recommendations of the Tariff Commission in the context of the Fifth Five Year Plan. They are in¹ general agreement with the approach of the Tariff Commission to create conditions to- stimulate greater production which, in the ultimate analysis, will serve the- interests of the consumers.

4. The prices recommended by the Commission include a provision towards minimum bonus as an element of coat. Government have not, however, accepted the view that minimum 'bonus should .be provided for as an element or cost and have accordingly deducted Re. 1 per tonne, from the price recommended by the Commission.

5. The prices recommended by the Commission include an allowance of Bs. 4 per tonne towards Rehabilitation and Development. In the context of the present price situation prevailing in the country, Government do not consider it appro- priate to 'increase the incidence on price to oe paid by consumers, of cement by including this allowance Rs. 4 per tonne towards Rehabilitation. Government have, therefore, decided to exclude this element of Rs, 4 per tonne from the ex- works price recommended by the Tariff Commission,

6. Consequently, Government have decided to fix ex-works price of cement produced by all existing units at Rs, 131 per tonne,

7. The above price of Rs. 131 per tonne includes, ag recommended by the Tariff Commission, an element of 50 paise per tonne -w_hich would be required to be deposited by each producer in a separate "Research Account" with the Central Government to be utilised by Government fur £iSEistin& Cement Research Institute of India and such other centrally organised Research Organisations which may be doing useful "Research and Development" work in the interest of cement industry as a whole. Separate instructions regarding the opening and operation of this 'Research Account" are being issued.

8. The ex-works price of Rs. 131 per tonne is exclusive of the selling expenses fixed by Government at Rs. 3 per tonne including the present Selling Agency Commission of Rs. 7.25 per tonne.

9. This price will be in force t'ill 31st March 1979, subject to escalations on the first of July every year for variations on account of (i) wages and dearnev:s. allowance fii) price of coal (iii) power tariff (ivj freight on coal, as recommended by the Commission. The escalation in respect of wages and/or clearness allowance would he subject to the condition that the escalation formula would apply only •when any general revision of wages and/or clearness allowance has the approval of the Government for the Cement Industry as a whole.

10. For bulk purchases made by Government Departments through Rate Con- tract, a rebate of Rs. 10 per tonne will be provided.

11. The resulting F.O.R. destination price of naked cement excluding packing charges and excise duty but providing for the aforementioned rebate on purchases by Government Departments through rate contracts, will be Rs. 186.75 per tonne.

12. The recommendations made by the Tariff Commission¹ on ex-works prices to be given to (a) units holding Industrial Licenc^s/C.O.B. licences which are in the process of being set up and expected to come into production shortly and (b) units in the Letter of Intent stage or licensed which are not expected to come into production till the last two years of the Fifth Plan period, are under examination of Government and decisions thereon will be announced separately.

13. In pursuance of the above mentioned decisions and after taking into account the escalations in costs subsequent to the submission of the Rep-ort by the Tariff Commission, the Cement Control Order, 1967 is beinp revised separately.

over the country and. that the position may be reviewed towards the close of the Fifth Plan period to see if any modifications are called for in the system.

1.6. The Tariff Commission has made a number of other ancillary recommenda- tions. These have been noted. Appropriate fiction -/ill be taken In respect of these separately in due course.

OKDER

ORDERED that a copy of this Resolution be communicated to all concerned and that it be published in the Gazette of India.

D. K. SAXENA, Jt. Secy.

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