GST Rate Slashed
The GST Council's decision to lower cement rates from 28% to 18% is the driving force behind the price reduction. This is the first time such a cut has
occurred since GST's introduction. This move aims to pass tax benefits to consumers, potentially impacting construction costs for individual home buyers. The cut also comes after cement prices had increased by ₹5-40 per bag across regions.
Price Drop Expected
Mumbai residents can anticipate cement prices dropping by ₹25-30 per 50kg bag. Companies are expected to reverse recent price hikes implemented in anticipation of the tax reduction. The impact is significant because cement accounts for about 12% of construction costs for individuals. This should provide some immediate respite for those planning construction projects.
Demand Impact Uncertain
Analysts are cautious about a surge in cement demand despite the price cut. Cement's inelastic nature means lower prices may not instantly translate to higher sales volumes. Experts at YES Securities highlight that lower rates won't necessarily lead to increased consumer purchases, given cement's commodity status. This could mean the price change may be felt slowly.
