Cement makers say denial of IS mark will hurt exportsHalf a dozen Nepali cement companies are in the final stages of obtaining certification, making their products eligible for export to India.
Nepali cement makers are worried that they won't be able to sell their products in India as it has stopped issuing the IS mark to Nepali cement. The stamp certifies that the cement meets an Indian Standard created by the national standards body, the Bureau of Indian Standards.
According to the Cement Manufacturers Association of Nepal, half a dozen Nepali cement companies are in the final stages of obtaining certification, making their products eligible for export to India.
“We are surprised by the Indian government's decision. It’s an abrupt decision that will prevent the export of Nepali cement to India,” said Dhruba Raj Thapa, president of the association.
Nepali cement companies said they had not been formally informed about the decision.
“We have heard through Bureau of Indian Standards agents that the Ministry of Commerce and Industry of India had ordered not to issue the IS mark to Nepali cement,” said Bishnu Prasad Neupane, managing director of Sarbottam Cement which has applied for the IS mark.
Nepal started exporting cement to India officially last July. Two manufacturers, Palpa Cement and Arghakhanchi Cement, currently sell their products in India too.
The Nepal government announced in the budget statement of the current fiscal year that an 8 percent cash subsidy would be given to cement producers who export their products. The offer of a subsidy has encouraged cement manufacturers to export their products to the Indian market.
Industry insiders say Indian cement manufacturers might have persuaded the Indian government to halt imports of Nepali cement to protect domestic factories.
“Quality is not an issue. In terms of quality, Nepali cement is better than Indian cement,” said Thapa, the owner of Cosmos Cement.
“We have stricter parameters for cement production than in India. For instance, the content of magnesium oxide or magnesia allowed in cement is a maximum of 5 percent while in India the maximum is 6 percent,” he said.
According to him, the percentage of fly ash allowed to be mixed in Portland Pozzolana Cement made in India is 35 percent while the maximum limit for Nepali cement is 25 percent.
"Such strict parameters make Nepali cement better than the Indian product," he added.
It has been nearly a month since the Indian government decided not to provide the IS mark to Nepali cement, domestic manufacturers said, adding that they had no knowledge about the exact reason behind the move.
Narayan Prasad Regmi, joint secretary of the Industry Ministry, said he was not aware of the matter.
Cement makers have to get the IS mark to be allowed to export their products to India. According to the association, Trishakti Cement, Jagdamba Cement and Ghorahi Cement were in line to get the IS mark.
"Two Nepali cement companies have obtained the IS mark, so there is no question why other companies are not eligible to get it too," Thapa said.
Pashupati Murarka, director of Arghakhanchi Cement, said it took around six-seven months to complete the paperwork to export cement to India.
Murarka, a former president of the Federation of Nepalese Chambers of Commerce and Industry, says his company has been exporting around 100 tonnes of cement daily to Gorakhpur, India for the last three months.
“Shipments were minimal in the initial days, but demand for Nepali cement is growing gradually in the Indian market,” Murarka said. He says he is not aware of recent developments.
Domestic cement manufacturers met with Minister of Industry, Commerce and Supplies Damodar Bhandari last Friday and Finance Minister Bishnu Paudel on Sunday and apprised them of the latest developments.
“The ministers have assured us that the issue will be resolved soon,” said Thapa.
The factory owners are scheduled to meet with Foreign Minister Bimala Rai Paudyal after she returns from a visit to Sri Lanka which begins on Thursday.
The association also plans to meet with the Indian ambassador to Nepal.
“The stop in the process of providing the IS mark needs to be resolved through diplomatic talks,” Thapa said. He added that such a move would hurt Nepal’s exports.
"Nepal's cement industry has the potential to export Rs150 billion worth of cement annually," Thapa said.
"Cement production has already slowed down to 30 percent of capacity due to a decline in domestic demand; and if exports are also halted, billions of rupees in investments will be put at risk," the association said.
There were 65 cement plants in operation as of mid-July.
International Cement, Ambe Cement and Butwal Cement are among the companies that have decided to close down their factories due to low demand, the association said.
The domestic cement industry has a total of Rs300 billion in investments and provides 15,000 jobs. Two new cement factories are under construction.
According to Neupane, Sarbottam Cement applied for the Indian Standards mark through the agent of the Bureau of Indian Standards about nine months ago, but they have not received a response.
“It should come within two months after the application is processed,” he said.