A day after the finance ministry cut import duties on a variety of product categories, top manufacturers of zinc -- Hindustan Zinc and Binani Zinc -- slashed prices. Binani has announced a cut of Rs 5,000 per tonne and Hindustan Zinc of Rs 4,500 per tonne.
Manufacturers of other intermediates that were given duty relief on Tuesday have not cut prices. Going by indications, they are unlikely to do so.
Meanwhile, PTI reports that finance ministry sources said the cut in customs duty could result in a revenue loss of about Rs 3,000 crore.
"We were planning to do this (customs duty cut) anyway on February 28... We decided to advance it because it has the potential to check inflation, especially in the manufacturing sector," Finance Minister P Chidambaram told reporters.
Cement stocks took a beating on the stock market during the day. The Sensex crashed 168 points due to heavy selling pressure in cement scrips, which ended the day with sharp losses.
The duty cuts were made to cool inflation, which reached a two-year high of 6.12 per cent for the week ended January 6. The price of cement has gone up by 26 per cent, copper by 26 per cent, nickel by 159 per cent, zinc 123 per cent, tin by 60 per cent and aluminium by 15 per cent over the last one year.
Said JK Lakshmi Cement Director Shailendra Chouksey, "International cement prices are still higher than domestic prices and we do not see any need for a price revision."
In the Wholesale Price Index for all commodities, the manufactured group has the highest weightage of 63.75 per cent.
The group has contributed about 50 per cent to the current spurt in inflation. Inflation in manufactured items shot up to 5.9 per cent during the week under review, higher than the average price rise in the previous two and a half years.
However, Saumitra Chaudhury, economic advisor of ICRA, predicted that "over a period of time, the customs duty cut will have a beneficial impact on inflation."
