Still Set In Cement

Essential for growth, indispensable for revenues, why cement stays stuck at the highest GST slab

- MONIKA YADAV

The 31st meeting of the Goods and Services Tax (GST) Council, held in December 2018, deferred a decision to reduce the GST rate for cement from 28 per cent to 18 per cent. This was despite recognising that cement—along with automobile parts—remained among the few mass-consumption items still taxed at the highest slab, which was originally meant for luxury and sin goods.

Explaining the rationale behind the decision, then finance minister Arun Jaitley had said at the time that GST on cement generated a revenue of around ₹13,000 crore and auto parts around ₹20,000 crore. "So if we bring down these items from 28 to 18, there will be an impact of ₹33,000 crore. The Council felt that this was too steep at the moment. That obviously will be our next target as and when the affordability improves," he had said.

More than six years later, the status quo remains. Cement continues to be taxed at 28 per cent, which makes it the only major construction material—crucial to infrastructure development—to be subject to the highest GST rate.

Cement's strategic importance India is the second-largest producer of cement in the world. According to the Economic Survey of India 2024-25, the current annual installed capacity of the cement industry stands at about 639 million tonnes, with cement production touching around 427 million tonnes in FY24.

"Domestic cement consumption is around 290 kg per capita, against a global average of 540 kg per capita. The government's focus on mega projects like highways, railways, and housing schemes, coupled with rural development and industrial growth, is expected to fuel significant cement demand," the survey stated.