NEW DELHI: Real estate developers’ association CREDAI has written to Prime Minister Narendra Modi accusing the cement and steel manufacturing industry of cartelisation, and called for immediate intervention in bringing soaring steel and cement prices under control.
Cement prices, CREDAI noted, have increased by more than 23 per cent and steel prices by more than 45 per cent since the beginning of this year. The letter went on to say that with a sudden upsurge in prices due to cartelisation, real estate developers have been experiencing an inevitable increase in construction costs. They are also faced with consequent delays in delivery, even the stalling of projects in some cases, it said.
According to CREDAI, in January 2020, cement prices per 50 kg bag was around Rs 349, but this has now shot up to Rs 420-430 per bag in December 2020. Similarly, the per tonne rate of steel has risen from Rs 40,000 in January to Rs 58,000 in December.
“The real estate sector has been working on wafer thin margins and is battling unsold inventory on one hand and unfinished projects due to lack of funds on the other. With a stagnant demand, developers have not increased prices...
There is an urgent need to control the spiraling cement, steel, and other raw material prices and I urge the Government to take necessary steps at the earliest,” said Jaxay Shah, Chairman, CREDAI. Satish Magar, President, CREDAI, said, “Like all sectors, the real estate sector too has come out of near-zero business... and was hopeful of revival during the festive season. (But) high raw material costs make projects financially unviable.”
Cartelisation the main cause of rising prices
In its letter to the PM, CREDAI laid the blame for the spike in prices on cartelisation in the cement and steel industries. CREDAI said the abrupt increase in prices was “highly unethical and amounts to unfair and restrictive trade practices” and is “a classic case of cartelisation by cement and steel manufacturers”. CREDAI says cement prices have increased by more than 23 per cent and steel by more than 45 per cent over the past year.