LAHORE – SALMAN ABDUHU - The local cement manufacturers are seriously considering setting up plants in India by investing billions of rupees, as exports from Pakistan to neighbouring country have been on constant decline ever since the two countries opened their borders for liberal bilateral trade. The decline is not due to lack of cement demand in India but because of very stringent non-tariff barriers erected by neighbour country, industrialists said.

Cement consumption in India is soaring and is expected to grow further by 7.5 per cent in FY12E against 4.4 per cent in FY11. The demand for cement has picked up sharply but the local manufacturer lobbies as well as the Indian government are creating hurdles in the way of import from outside, compelling the foreigners to invest directly in India to fulfil ever-increasing demand.

Sources said that the Indian Planning Commission Working Group, in its final report for preparing the roadmap for the sector in the plan period (2012-17), has projected 10 per cent to 11.75 per cent growth in demand, production and the installed capacity of cement during the five-year period.

The projected expansion in Indian cement industry calls for huge investment and is indeed a Herculean task. The government, instead of encouraging import, will provide incentives to foreign investors and the much-needed infrastructure support, particularly the availability of fuel, coal and logistics support in terms of railway wagons, has said.

The cement exporters in Pakistan, having potential to export a big quantity to Indian market, are facing a strict resistance by Indian government as NTBs are not being removed even after having been specifically mentioned during different rounds of official and unofficial talks between the two countries.

Sources said that Lucky Cement is contemplating having a direct presence in India once it has achieved key understanding of the Indian market and the opportunities it may offer. At present, Lucky Cement is seeking guidance both from the Pakistan and Indian government authorities on the existing FDI policy.

Sources said that country’s largest cement maker has also shown interest in setting up a manufacturing plant in India after New Delhi allowed foreign direct investment from Pakistan in an attempt to strengthen business ties between the estranged neighbours.

Lucky Cement, which also has manufacturing units in Iraq and Congo, has been exporting building material to India.

Lucky Cement has annual production capacity of 7.75 million tonnes, according to the company’s website, and possesses international quality certifications, including that from the Bureau of Indian Standards. The company is listed on the Karachi, Lahore, Islamabad and London stock exchanges,

The investment would be a small yet significant step in building investment ties between India and Pakistan.

Industry sources said that Lucky Cement has approached the Indian agency for more details on the FDI policy with a view to explore and establish a manufacturing unit in Amritsar. According to sources, Lucky Cement considers that India was a lucrative market for the cement company because of its huge market and large middle class.

Lucky Cement brands are selling successfully in the Indian market and view the opportunity to explore the Indian market as very beneficial for Lucky Cement.