CREDAI, NAREDCO expect steel prices to come down after govt’s measures

New Delhi: Realtors' bodies CREDAI and NAREDCO have hailed the government's measures to bring down the prices of steel and cement and hoped that the manufacturers will pass on the benefits to their customers.

Both the associations have been raising the issue of a sharp rise in steel and cement prices in the last one year, resulting in an increase in the overall construction cost. Many builders have raised housing prices to offset the rise in construction costs.

On Saturday, the government waived customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry, a move that will lower the cost for the domestic industry and reduce the prices. The duty on exports of iron ore has been hiked up to 50 percent, and a few steel intermediaries to 15 percent.

CREDAI President Harsh Vardhan Patodia said: "We are pleased with the finance minister and the government's intervention to control the rise in the cost of raw materials and in turn, control inflation as the Indian economy had stayed resilient while grappling with the strains of cost inflation of raw material prices but had disrupted the growth of the real estate sector in the last 18 months".

He noted that the government's move to reduce import duties on steel products should provide a sigh of relief to all stakeholders.

"Additionally, a reduction in import duty of iron ore and steel intermediates will further bolster the availability of raw materials domestically, cool off the prices of steel products, and help tide the rise in prices of projects, strengthening consumer sentiment," Patodia said.

The Finance Minister's assurance to improve logistics and help domestic availability of cement and lowering custom duties on coal products used in the production of cement will have a positive impact on the cost of the commodity, he added.

"Furthermore, a reduction in prices of fuel tax to pre-Covid levels will help bring down the transportation costs of all raw materials and essentials in industries agnostic of their businesses and reduce the pressure on the end consumers," Patodia said.

Going forward, the CREDAI President suggested that the state government should cut down on state duties on fuel to have a direct impact on the rise in inflation.

Patodia hoped that "manufacturers will pass on the price cuts to end-users".

"This will help the real estate developers negate increased construction costs over the last 2 years, which will only help prospective homebuyers," he added.

Colliers India CEO Ramesh Nair said: "Developers have been under pressure to raise prices as the cost of construction materials has seen a double-digit surge in recent times. As per Colliers' initial estimates, the cost of construction was likely to rise by a further 8-9 per cent by the end of 2022".

In this scenario, he said, the government's intervention to control this rise by rationalising duties and taxes on key inputs is timely and is likely to have a positive trickle-down effect on the end consumers.

NAREDCO's President Rajan Bandelkar said, "The move to reduce the import duty on raw materials of iron and steel and steps to ease the supply of cement would help curb the inflation and the soaring prices in the real estate segment."

He said the high input cost has been impacting the developers over the past several months and property prices too have seen an uptick of late, bringing concerns for the nascent recovery of the realty sector in the country.

"Now, the measures should help further improve the home buyer sentiment. Better availability of cement through improved logistics also comes as a welcome move. However, the steps should be complemented with GST rationalisation on cement, which forms a major part of the construction expenditure," Bandelkar said.

On Saturday, Finance Minister Nirmala Sitharaman said the government is calibrating customs duty on raw materials and intermediaries for iron and steel to reduce their prices. Import duty on some raw materials of steel will be reduced.

Export duty on some steel products will be levied, she said.

The finance minister said that measures are being taken up to improve the availability of cement and through better logistics to reduce the cost of cement.

(With agency inputs)

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