Real estate industry body CREDAI has written to Prime Minister Narendra Modi, seeking government's immediate intervention to regulate rates of cement and steel as it alleged that prices have increased sharply due to "cartelisation" by manufacturers of these two major construction raw materials. CREDAI said the abrupt increase in prices is "highly unethical and amounts to unfair and restrictive trade practices" and is "a classic case of cartelisation by cement and steel manufacturers".
The association said cement prices have increased by more than 23 per cent and steel prices have increased by more than 45 per cent since the beginning of this year. In January 2020, cement price was around Rs 349 per 50-kilogram bag, which has now increased to Rs 420430 per bag in December 2020.
At the beginning of this year, the per tonne rate of steel was at Rs 40,000 and has now rocketed to Rs 58,000 in December 2020, it said in a statement. CREDAI has written to the Prime Minister and all concerned ministries, urging them to "take note of cartelisation by cement and steel manufacturers." The association, which has more than 20,000 members, requested the government for an immediate intervention in regulating the prices of construction raw materials.
CREDAI said real estate is one of the worst-hit sectors due to the COVID-19 pandemic. With a continuous and sudden upsurge due to cartelisation in the prices of steel, cement and other raw materials, real estate developers are experiencing an inevitable increase in construction cost and are faced with situation that will create a delay in delivery, stalling of projects in some cases, thereby impacting the homebuyers at large, the statement said.
"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 the prices and are selling projects at affordable rates," said CREDAI Chairman Jaxay Shah. Stating that there is an urgent need to control the spiralling prices of cement, steel and other raw materials, Shah urged the government to take necessary steps at the earliest.
Satish Magar, President, CREDAI, said the real estate sector had near zero business in the first two quarters and was hopeful of revival during the festive season. "High raw material costs make projects financially unviable and are causing distress amongst developers. I humbly request the government to do the necessary and arrest the price hike of cement, steel," he added.