Indian cement manufacturers are looking to set up production units in the UAE to cash in on the high demand.
JK Cement and Binani Cement are in advanced talks to set up their units in the UAE, as cement companies face multiple government restrictions. Cement is one of the most heavily taxed commodities with taxes constituting over 65 per cent of the prices in India.
“UAE could be one of the good markets for us. The country does not have sales tax, income tax and central tax. It can also be used as an exporting hub for African countries,” Vinod Juneja, joint managing director, Binani Cement, told the Business Standard.
Besides, JK Cement is also planning to set up a cement unit with an investment of $350-400 million (Dh1.3-1.5 billion) in Fujairah, in association with the Fujairah local government.
“There are many hurdles in our country. Due to ease of doing business outside, there could be several more cement firms moving out,” HM Bangur, chairman and managing director of Shree Cement and president of Cement Manufacturers’ Association, told the Indian media.
He pointed out that land acquisition in India was tough and getting clearances prior to construction could take up to three years.
The UAE and Saudi Arabia are setting the standard for expansion, with the biggest increases in cement production in the region.
The construction boom is playing a major role in raising domestic demand. In three years’ time, both the UAE and Saudi Arabia will account for 90 per cent of the GCC cement market, according to Middle East Economic Digest.
With $6.7bn being invested in planned projects across the region, the industry is preparing for an unprecedented build-up in production. About 29 schemes are planned or under way. Output will more than double to about 106 million tonnes a year in 2010 from 50 million tones per year.
According to Qatar-based Gulf Organisation for Industrial Consulting, the cement grinding capacity in the UAE is likely to surge by 51 per cent in 2008, settling at 35.4 million tonnes per annum, prior to leaping a further 14 per cent in 2009 to record 40.5 million tonnes.
While demand for iron and steel products, at the same time, are estimated to surge to 19.7 million tonnes by 2008 from 15 million tonnes in 2005, it said.
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