Gujarat’s mini cement plants want village industry status

July 24th, 2008 - 4:33 pm ICT by IANS  

Ahmedabad, July 24 (IANS) Gujarat’s small cement factories are facing closure on account of rising manufacturing costs, according to an industry lobby. The Gujarat Mini Cement Manufacturers Association (GMCA), representing small cement units, also said the state government has done little to help this sector.

“We have proposed to the state government that the mini cement sector be treated as a village industry,” GMCA secretary Kirit Vyas told IANS.

“Most of these units are located in rural areas and can be made eligible for incentives that are granted to rural industries set up under the umbrella of khadi and village industries,” he said.

The association has also asked the state government to reduce the value added tax (VAT) on cement produced by these units by half from the existing 12 percent, as has been done by the Rajasthan government.

Vyas said Gujarat’s mini cement plants, with 200 to 300 tonnes per day capacities, are also facing “unequal competition” from the bigger cement units.

What hurt most, he said, was the sharp increase in the price of limestone, the key input for making cement, in the past one month.

Similarly, coal, clinker, furnace oil and diesel have become costlier, which has been further compounded by spiralling transport and other logistics costs, he said.

“The cement factories are facing extreme hardship and if no relief is provided, units may have to resort to shutting down manufacturing operations.”

Gujarat has 90 operational mini-cement plants with a production capacity of 5,000 tonnes per day. Most units are located in the Saurashtra-Kutch region, with some located near Ahmedabad and north Gujarat.

Vyas said Gujarat ought to emulate Rajasthan, where about 50 units of the near 80 mini cement units closed down after incentives and concessions were withdrawn. The development prompted the Rajasthan government to restore the incentives besides reducing the VAT rate by half.

“There has been a total turn around now, all these units are operating normally, yielding substantial revenues for the state government,” Vyas said

Currently, the Khadi and Village Industries Commission has defined village industry as any unit located in a rural area, producing “any goods or rendering any service” with or without the use of power, and in which the fixed capital investment per artisan or worker does not exceed Rs.100,000.

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