Cement industry plays a crucial role in the development of an economy. It contributes significantly to the GDP and generates employment. Growing population, increasing scale of economic activities, and growth in the real estate sector have led to a boom in Indian cement industry. Various infrastructural development initiatives of Central and State Government also stimulated demand for cement. Indian cement industry has enormous growth potential. It is attracting FDI through mergers and acquisitions. The synergic effect has resulted in technological advancements and production efficiency in cement industry. Despite of having huge growth potential, the growth of cement industry in India is not satisfactory due to various economic and other policy implications. A high rate of GST is one of the most important factor hindering the growth of cement industry. Cement is placed in the 28% tax slab of GST in India, which is higher than the other developing and developed countries. As individuals use more than 65 percent of cement for housing constuctions, a higher tax rate on cement will adversely affect the marginal sections of the society. Non-availability of Input tax credit (ITC) in construction and real estate sector also a negative impact on the growth of and real estate and cement Industry. GST being a consumption-based tax, the entire tax burden is on end-users. Considering all the factors an attempt is made in this study to analyze the impact of GST on the Cement Industry. It is found that growth in production, consumption, sales and FDI inflows is not satisfactory in Indian cement industry after GST implementation.
Source: ssrn.com
