Cement prices across various states are likely to increase as state governments may impose new mineral taxes after a Supreme Court judgement, according to JM Financial report.
According to the Supreme Court ruling in July 2024, which allowed states to levy taxes on mineral rights and mineral-bearing lands and royalties, Tamil Nadu introduced the Tamil Nadu Mineral Bearing Land Tax Act, 2024. Under this law, an additional Rs 160 per tonne tax on limestone mining will take effect from 20th February 2025. With other mineral-rich states, including Karnataka, considering similar measures, cement companies are expected to raise prices to offset rising costs.
The new tax is expected to impact cement manufacturers operating in Tamil Nadu significantly. As limestone is a key raw material in cement production, the additional tax will increase the cost of manufacturing, forcing companies to consider price hikes to maintain profitability.
To offset the cost impact, cement prices in Tamil Nadu are expected to rise by Rs 8-10 per bag.
Over the past few years, cement prices in the state have been under pressure due to intense market competition. However, with this new tax burden, companies may have no choice but to pass on the additional cost to consumers through price increases. Industry experts believe that Tamil Nadu's move may set a precedent for other mineral-rich states to introduce similar taxes.
Cement companies are expected to adopt a gradual approach to price hikes to avoid sudden shocks in the market. However, the industry's pricing strategy will be a key factor to watch shortly with rising input costs.
