Asia / Oceania
MFN won’t help spur cement exports
Apr, 17 2012
(India) -- The Most Favoured Nation (MFN) status to India may not give boost to Pakistan’s cement exports to the neighbouring country mainly due to the Pak-specific non-tariff barriers, experts said.
They regretted that despite rhetoric to promote trade with Pakistan, the Indians have not yet removed NTBs that impede exports from Pakistan.The cement sector representatives said that though there is high demand for Pakistani cement in India, where cement is around 16 per cent costlier as compared to Pakistan, the exports have constantly declined from 786,672 tons in 2007/08 to 590,104 tons in 2010/11.
The decline has mainly been due to less number of train interchanges, as there are maximum three train interchanges a week, they said.Moreover, multiplicity of Indian standards, rules, regulations and enforcement agencies create confusion and hurdles in smooth trade. Likewise, the absence of testing facilities at border causes undue delays, they added.
According to them, the Indian cement prices stand at almost Indian Rs 280 per 50kg bag but if cement is imported from Pakistan, its price would be 16pc less at Indian Rs 235. Presently, local cement manufacturers are exporting cement to India through trains only. Therefore, only a limited quantity of cement could be exported to India currently.Criticizing the opening of new trade route between the two countries, they said that it would not be beneficial for the export, as supply of up to 40 tons’ goods has been allowed through this passage. In the same way, only 10-wheeler trucks have been allowed to enter the border, they added. Cement industry uses up to 22-wheeler trucks for transportation, having capacity of carrying around 80 tons of cement.
They said that these restrictions will hinder the export severely and the real aim of enhancing bilateral trade through opening of new trade route will never be achieved by imposing such limitations, they added.All Pakistan Cement Manufacturers Association’ former chairman Tariq Saigol, while talking to The Nation, said that Pakistan, with a vast potential to meet India’s cement demand of construction sector, is unlikely to enhance its exports manifold to the neighbouring country with the award of Most Favoured Nation (MFN) status in presence of NTBs.
He believes that India is a place where manufacturers can offload huge surplus production of the commodity as their supplies are restricted against productions, he said. Pakistan cement manufacturers have a combined installed capacity of around 44 million tons whereas cement demand stands at around 31 million tons including 30 percent exports and 70 percent local consumption, leaving around 10 million tons of surplus capacity, he added.
Tariq Saigol said that Pakistan has already exported bulk of cement to Afghanistan but India has so far received only a tiny chunk of it due to Non Tariff Barriers. He said that the government had proposed to the Indians to allow Pakistani trucks to carry cement to the Indian side of the border where transhipment should be carried out to Indian trucks, but they rejected this proposal on the grounds of absence of parking area on their side.However, the facility has now been developed by Indians close to the border which can be used for transhipment area.
The former APCMA chairman said that as compared to Pakistan, India has an altogether opposite supply-demand situation. The cement industry in India has been facing certain challenges to bridge its local demand despite roughly 300 small and 130 large plants with an installed capacity of around 234 million tons. India’s aggregate production capacity of these plants is around 167 million tons, he said.
There has been an acute shortage of cement in the Indian market that takes around 15 days for delivery of cement bags on cash basis, he said. This is also fuelling the delays in projects and construction schedules in the country and forcing the government to import cement from other countries.
The cement exports to India through Gujarat port would benefit southern cement players, as their location is nearer to the sea port.
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