Ramco Cements, Dalmia Bharat, UltraTech, and ACC Share Price in Focus as Tamil Nadu Imposes Limestone Tax

The Tamil Nadu government has introduced a new “mineral-bearing land tax” on limestone, which is expected to raise cement costs by around ₹10 per bag. This move will significantly impact cement manufacturers like Ramco Cements and Dalmia Bharat, while UltraTech Cement and ACC may face only a minor impact due to their limited clinker production in the state.

Details of the New Tax

The government has proposed an additional ₹160 per tonne tax on limestone mined in Tamil Nadu. This follows Karnataka’s recent decision to impose a ₹25 per tonne tax on limestone. 

Challenges in Passing the Cost to Consumers

For cement producers to offset the increased costs, they would need to increase cement prices by ₹10 per bag. 

Potential for Similar Taxes in Other States

Industry experts suggest that other states may introduce similar taxes in the future as they look for additional revenue sources. Karnataka passed a similar law in December 2024, which is still awaiting approval from the state governor.

Legal Framework for Limestone Taxation

Limestone miners already pay royalties to the state government under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act). These royalties are either a fixed amount per tonne or a percentage of the market price. However, a July 2024 Supreme Court ruling confirmed that state governments can impose additional taxes on mineral-bearing lands beyond these royalties.

Conclusion

Tamil Nadu’s new limestone tax is set to increase cement production costs, putting pressure on companies to raise prices. While industry players might negotiate for a lower tax rate, other states could follow suit with similar measures. Cement manufacturers operating in Tamil Nadu will need to find ways to manage rising costs while balancing affordability for consumers.

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