Spat between builders, cement makers ramps up over price hike

NEW DELHI:  The tussle between manufacturers of construction inputs such as cement and steel and builders is intensifying, with both sides trading charges of faulty trade practices. Condemning the proposed strike by Builders Association of India (BAI) on February 12, the South India Cement Manufacturers Association (SICMA) alleged that builders were spreading “misinformation” on cement prices to take advantage of the economic recovery and increase real estate prices, which are already at unaffordable levels.

SICMA has also written to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to “look into profiteering being done by builders”. On the other hand, the builders have alleged that cement prices have been increased from Rs 280 a bag to Rs 420, forcing them to stop many of their projects.

Nearly 60,000 builders and construction workers are expected to participate in the strike slated for February 12.  SICMA, however, argued that across markets, builders access cement at the rate of Rs 6,000 per tonne or below, which means cement accounts for only Rs 150 a sq ft of a built-up area. “How can cement prices impact the increase in their flat construction cost?,” rued SICMA.

Responding to BAI’s claims that the price of cement has gone up, SICMA said the CAGR of the price in the past five years has remained flat. “It is their (builders) intent to take higher input credit of GST by giving non genuine bills,” said SICMA. It also questioned why builders are not reducing prices and selling off inventory instead of holding on to in a “cartelised” manner. 

CCI action against cement industry
The Competition Commission of India had earlier come down heavily on cement companies, many of whom saw their offices being raided in December 2020 as part of a fresh probe against price cartelisation. In 2016, the CCI had slapped a fine of RS 6,700 crore on 11 cement makers,