Is there cement cartelisation in India?
The Pioneer

Chance pe dance-II

In my opinion, it's a substantial allegation that a few cement manufacturers in India act as a cartel and sell their produce at higher prices than that could have been determined by fair interplay of market forces.

Talk of the cement companies forming cartels and cutting output to raise prices has been doing the rounds in North Block for a while. Though, the industry has vehemently contested these charges.

The Monopolies and Restrictive Trade Practices Commission had sent notices to 14 cement producers on July 25 for allegedly colluding to raise prices; it is in my opinion a much warranted step.

-- KA Solaman, Kerala

In my opinion, a strong cartel dominates prices in our cement industry. Some 6-7 big players have monopolised the cement industry.

When, Finance Minister P Chidambaram had announced a differential duty structure on cement, in his Budget speech, the industry had reacted sharply by increasing the price of the commodity.

Demand for cement is expected to remain buoyant in line with the booming economy. To maintain cement prices, in the short-run, import from Pakistan is a viable option. However, in the long run, the present capacity should be expanded and newer player be encouraged by allowing incentives.

-- A Jacob Sahayam, Thiruvananthapuram

In my opinion, consumers end up paying unreasonable prices for cement because of a strong cement cartel. Indicators are plentiful that support existence of cement cartel in India.

Until recently, cement was priced at Rs 160 per bag, whereas now it is available for Rs 250 or more in the market. It means an increase of about a hundred rupees in a year. This is because of the fact that prices are fixed by Cement Manufacturing Association (CMA) and not by individual players. The CMA creates unwarranted scarcity so that they can exploit the consumers and charge high prices.

The Union Government must come forward to put an end to this illicit cartelisation of cement companies by putting more checks, otherwise the consumers would be left with no other option than revolting against this unsavoury exploitation.

-- VV Nambiar, Thrissur

I feel convinced that the steep rise in cement prices is not fully market determined and there are strong reasons to believe that there exists a cement cartel. Infrastructure is the key to growth for any emerging economy. In my opinion, the Government should take immediate and adequate steps to investigate the allegation of cement prices being dominated by a few players.

Even a simple observer can tell that there is a lot of thrust on infrastructure, which would mean that demand would continue to grow. However, a dual policy in this sector can hamper projects and the country may face a shortage of cement.

Instead of following dual policy, the Government should provide a level playing field and influence the volatility in the prices through other policy measures such as allowing imports of larger quantity of cement. In a bid to curb the rising cement prices and as a welcome step, the Government had permitted, Minerals and Metals Trading Corporation (MMTC) to import cement sans Bureau of Indian Standard (BIS) certification.

-- HS Gumbhir, Lucknow

In my opinion, there is no cement cartel in India. Cartels are prohibited as per the Indian law. Moreover, in a world of break neck competition, competitors are bound to compete and not cooperate.

It's a myth that a strong cartel controls and dominates the price determination mechanism. The best way to eliminate price speculation is to adjust the supply side factors in lights of the rising demand.

No doubt, the Government should keep a strong vigil over the prices. But, unless established as per the procedure established by law, any such perception is ill founded on the basis of mere media reports or some indirect references.Prices of real estate has sky rocketed across the country. Is that a ground to believe that a cartel exists in real estate sector? How can it then be simply ruled, that prices in the cement industry are going towards north owing to cartel?

-- PMG Pillai, Kerala