Realty developers urge govt to set up regulatory body for cement sector

MUMBAI: In the backdrop of frequent allegations of cartelisation and undue profiteering in the cement manufacturing industry, realty developers have urged Prime Minister Narendra Modi to set up a regulatory authority for the sector.
Builders Association of India (BAI), the apex body of the construction industry with over 20,000 business entities, has stated in its letter that such regulatory authority will prevent manufactures from indulging in unethical trade practices.

In May, developers had sought government’s intervention alleging cartelization among cement and steel manufacturers following a sudden increase in prices.

The developers’ body has substantiated its demand with the rulings and observations of various statutory bodies, committees and submissions in supreme institutions like Parliament and its statutory committees.

“The Competition Commission of India (CCI) in case No.29/2010 filed by BAI, conclusively found on June 20,2012 the existence of cartel arrangement amongst the cement manufacturers resulting in the manipulation of sale price of cement. The CCI imposed a penalty of Rs.6,307.32 crore on 10 cement manufacturers and Cement Manufacturers Association (CMA),” the letter said.

It further adds that CCI also issued ‘cease and desist order’, against which the manufacturers moved in appeal before National Company Law Appellate Tribunal (NCLAT). The NCLAT in its order dated July 25, 2018 upheld the penalty. The cement manufacturers have now filed an appeal before the Supreme Court on October 5, 2018, where it is pending since then.

“Infrastructure and housing sector being an enabler of economic growth and cement is the basic input for the construction sector. Cement industry, however, indulges in cartelisation for profiteering…it is of the utmost importance to safeguard the interest of the sector, the common man and give push to economic growth of the country by establishing a regulatory authority for the cement sector,” said Mu Moahan, President, Builders Association of India.

The letter has also cited an observation by Parliamentary Standing Committee of Ministry of Commerce which in its 95th report on ‘Performance of Cement Industry’ tabled on February 24, 2011 in Rajya Sabha, has recommended the need of the constitution of a regulatory authority.

Citing the above-mentioned facts, the BAI has urged the Prime Minister to constitute the Cement Regulatory Authority on the lines of the ones constituted for the telecom, real estate, insurance sectors.

Cement Industry was de-controlled in 1989 and de-licensed in 1991 under the policy of economic liberalization. Decisions of installation of new plants are taken by the industry based on market demand.