Davos: "After reducing import tariff on cement, India has proposed further steps to ease its prices, such as extending incentives for use of fly ash and assuring long-term coal supplies," senior officials said.

"India mainly uses high-quality cement made from limestone, which is often not needed for the purposes it is being used. It is also more expensive. So we want to encourage the use of cement made of fly ash and slag," an official said.

"We are considering proposals such as reducing excise duty on slag from existing eight percent. We will also request state electricity boards to sell their fly ash free as they had been doing in the past," he added.

Commerce and industry ministry officials, here to attend the annual meeting of the World Economic Forum (WEF), said they did feel there was scope to cut excise duty on finished cement.

"But that is possible when there is perfect competition, and not in an oligarchy," another official said, adding the government did realise that the various levies on domestic cement at Rs.46 a bag was indeed high.

According to officials, a proposal has also been floated to ensure that supplies from the state-run Coal India Ltd on a long-term rate contract continue for cement manufacturers.

Cement manufacturers in the past were getting some 80 percent of their coal supplies on long-term contracts, which were 30-40 percent lower than purchases in spot markets. But now that figure has been reduced to 56 percent.

The government wants to ensure that at least 80 percent of the earlier supplies are given under such long-term contracts, which effectively means at least 64 percent of the supplies needed by coal manufacturers.

Another measure being considered is to waive or reduce import duty on pet coke, which is also used as fuel.

India currently has the capacity to produce 155 million tonnes of cement and the actual output amounts to 140 million tonnes. In addition, 50,000 tonnes also flow in as imports from Bangladesh and Bhutan.