Relief for cement cos, but demand stalls

The Goods and Services Tax (GST) Council has slashed the rate on cement from 28% to 18%, a move aimed at boosting construction activity.

- Dipali Banka

"...because cement is so essential for the middle class when building homes, that is why the 28% has been reduced to 18%," finance minister Nirmala Sitharaman said late Wednesday while addressing the media after the GST Council meeting. The change will be effective from 22 September.

The decision, a long-pending demand of the industry and consumer groups, is expected to reduce the effective billing price of cement by nearly ₹30 per bag, according to a 24 August Yes Securities note.

The two largest cement makers, Aditya Birla Group's UltraTech Cement Ltd and Adani group's Ambuja Cements, closed 0.64% and 1.05% lower on the stock exchange, even as the benchmark Nifty closed almost unchanged.