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The Builders Association of India has urged Prime Minister Narendra Modi to constitute a Cement Regulatory Authority to curb the cartelisation and undue profiteering persisting in the cement manufacturing industry.
Mu Moahan, President, Builders Association of India, in a letter addressed to Modi said the regulator should prevent manufactures from indulging in unethical trade practices, which have been causing irreparable damage to the country's economic growth and hurting the interests of the common man and the construction industry.
“In 2012, the Competition Commission of India had found existence of a cartel among the cement manufacturers resulting in manipulation of sale price of cement,” he said.
Alao read: India Cements’ Q2 net profit zooms on better prices, cost control
The CCI imposed a penalty of ₹6,308 crore on 10 cement manufacturers and Cement Manufacturers Association.
It also issued a ‘cease and desist order’, against which the manufacturers moved in appeal before National Company Law Appellate Tribunal, which in its order in July 2018 upheld the penalty.
An appeal filed by the cement manufacturers is now pending before the Supreme Court since October 2018, he pointed out.
The Parliamentary Standing Committee of the Ministry of Commerce has recommended constitution of an authority and noted that one of the reasons for the rise in cement prices is the profit motive of cement companies. It said the proposed regulatory authority should regulate cement prices to curb the tendencies of market dominance, under-utilisation of capacity and creating artificial scarcity, the letter said.
Also read: Birla Corporation net profit rises 87 per cent in Q2
In the last three years, cement companies have reported production levels at way less than capacity. “This shows that the cement manufacturers are deliberately not utilising the installed capacity of cement production with the purpose of creating an artificial shortage of availability of cement in the market to control the prices,” the letter read.
The cement industry was de-controlled in 1989 and de-licensed in 1991 under the policy of economic liberalisation.
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