In October 2013, the Indian Cement Industry entered into the 100th year of its existence having, inter alia, state-of-the-art technology and world class cement production.
In its journey of close to a century, there had been several periods in which the cement industry was hit hard due to Government policies while some spells provided reliefs too. Through all this, the constant has been a continuous shortfall in the infrastructure support – power, coal and railway wagons.
There are two clear distinct Phases. There has been a significantly long phase of seven-and-a-half decades of the “Full Control” since 1914 till the “Complete Decontrol” in the year 1989. The Second Phase being the Post-Decontrol Era, a relatively smaller period of two-and-a-half decades as of now.
Phase I: Full Control
The ‘Full Control’ phase resulted into a continuous shortfall in the infrastructure support – power, coal and railway wagons. Entire Industry was hit hard due to Govt’s policies at times whereas at times it provided some reliefs as well. However, by and large data reveals that the cement industry had to fight for its survival. By 1924 the capacity reached to mere 6.60 lakh tonnes.At the time of India’s partition in 1947, there were 23 cement plants in operation with a total capacity of 2.2 Mt.. With the partition, 18 plants remained in India and 5 plants went to Pakistan. The plants with India had an aggregate capacity of 1.47 Mt..It may be argued that India was under British rule and quite naturally the policies were made looking into the Britain’s definitions of priorities.
To help improve the health of the cement industry, the then Government machinery made efforts. It was however, subject to control in respect of price and distribution under Defence of India Rules between August 1942 - September 1946, followed by informal control by fixing of prices by executive orders between October 1946 and June 1956.
This trend appeared to be unchanged through Tariff Commission’s Enquiries (1953, 1958, 1961 and 1974).Cement prices were seen to be kept low forcibly by the Govt. Authorities and whatever reliefs were observed to be offered, were found to be ‘Too little Too late’.
As a consequence, the performance of the cement industry was adversely affected, throttling its own growth and development. During this period, cement was, time and again, in severe short supply with attendant rampant black-marketing, filling the pockets of the anti-social elements, adulteration and, most importantly, inadequate cement supply to projects, including housing and also to small consumers for repairs. It was a dominant Permit Raj.
Phase II : Complete Decontrol
The real relief started coming in with the dispensation of partial decontrol in 1982, primarily based on Dr. A.K. Ghosh Committee’s recommendations, which was the beginning of loosening the grip of Government controls. This was a very important milestone in the history of the cement industry. Encouraged by the step, the cement industry chalked out and implemented a massive and comprehensive modernization programme. This, inter alia, included conversion of wet and Semi-dry process kilns to energy-efficient dry process, scrapping of small capacity out-dated kilns, setting up of captive power plants to insulate the industry against erratic power cuts and poor power quality, etc. These steps had started showing positive results. Consequently, in a short span of slightly over six years, the capacity reached 61.74 Mt. more than two-and-a-half times in 1989-90 as against only 23.30 Mt. in 1982-83. The reforms of 1991 also acted as a fillip. ‘BUYERS’ Market emerged in cement in 1990.
The exponential growth posted by the cement industry can be gauged from the fact that the cement industry took 83 long years to touch the first 100 Mt. capacity, while for adding the second and third 100 Mt.mark, the period was substantially compressed to 11 years and 3 years respectively. The cement industry reached over 350 Mt. cement capacity and 251 Mt. production in 2012-13.